E:7

The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $57,000. The annual cash flows have the following projections. UseAppendix BandAppendix Dfor an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year 1 2 3 4 5

Cash Flow$ 24,000 225,000 328,000 416,000 59,000

a.If the cost of capital is 8 percent, what is the net present value of selecting a new machine?(Do not round intermediate calculations and round your final answer to 2 decimal places.)

Net present value$

b.What is the internal rate of return?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Internal rate of return %

c.Should the project be accepted?Yes orNo