Question
Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $95,000 and
Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $95,000 and will generate net cash inflows of $21,000 per year for 8 years. (MULTIPLE ANSWERS)
A.)
- If the discount rate is 7%, then the project's NPV is __________ (Round to the nearest dollar.)
- The project (should OR should not be) accepted because the NPV is (negative OR positive) and therefore (does OR does not add) value to the firm.
B.)
- If the discount rate is 17%, then the project's NPV is $__________ (Round to the nearest dollar.)
- The project (should OR should not be) accepted because the NPV is (positive OR negative) and therefore (does OR does not add) value to the firm.
C.)
- This project's internal rate of return is __________% (Round to two decimal places.)
- If the project's required discount rate is 7%, then the project (should OR should not be) accepted, because the IRR is (higher than OR lower than) the required discount rate.
- If the project's required discount rate is 17%, then the project (should OR should not be) accepted, because the IRR is (higher than OR lower than) the required discount rate.
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