Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $90,000 and will generate net cash inflows of $19,000 per year for 11 years. To answer Orange item questions, keep the text that is the best answer.

a. What is the project's NPV using a discount rate of 7 percent? (Round to the nearest dollar.)

If the discount rate is 7 percent, then the project's NPV is:

Should the project be accepted?

The project

_____________

accepted because the NPV is

______________

and therefore

______________

value to the firm.

b. What is the project's NPV using a discount rate of 16 percent?

If the discount rate is 16 percent, then the project's NPV is:

Should the project be accepted? Why or why not? It should be since it has a + NPV

c. What is this project's internal rate of return? (Round to two decimal places.)

This project's internal rate of return is:

Should the project be accepted? Why or why not?

If the project's required discount rate is 7%, then the project

accepted because the IRR is

the required discount rate.

If the project's required discount rate is 16%, then the project

accepted because the IRR is

the required discount rate.