Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of

$110 comma 000

and will generate net cash inflows of

$19 comma 000

per year for

11

years.

a.What is the project's NPV using a discount rate of

8

percent?

Should the project be accepted? Why or why not?

b.What is the project's NPV using a discount rate of

14

percent? Should the project be accepted? Why or why not?

c.What is this project's internal rate of return? Should the project be accepted? Why or why not?

Question content area bottom

Part 1

a.If the discount rate is

8

percent, then the project's NPV is

$.

(Round to the nearest dollar.)