Canning Machine

Discount Rate. | NPV

12% $ 414,197 14% $ 230,258 16% $ 59,894 18% $ -98,182 20% $ -245,113 It's possible, but it is recommended to use a financial calculator or Excel. For now, let's stick to an approximate value.

What is the approximate IRR that will make the NPV equal to $0? Is Hence IRR lies between 16% & 18%

PART B

What does the IRR tell us about the new canning machine? " It means that if our required return (9.5%) is less than the IRR, we should invest in the new machine." What is your recommendation?

A) Do not purchase the new machine. The required return is greater than the IRR.

B) Purchase the new machine. The required return is less than the IRR.