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Herbs Pty Ltd is considering investing in a new herb packaging machine. The machine is estimated to cost $80,000 which can last for 7 years

Herbs Pty Ltd is considering investing in a new herb packaging machine. The machine is estimated to cost $80,000 which can last for 7 years before it becomes too costly to maintain and can be sold for scrap at $7,000. The project is estimated to bring in additional $20,000 cash inflow and incur $12,000 in additional expenses related to the running the machine in the first year. The company expects there will be an annual sales growth of 6% from year 2 onward. Expenses are also expected to grow by 3% annually from the second year of the operation.

The company plans to fund the purchase of the new machine using a bank loan with an interest rate of 9%.

  1. How long is the payback period for this project? years. Case sensitive. Type in 7.00 (two decimal places) for 7 years.

  2. What is the NPV for this project? $ . Case sensitive. Type in 120,000.00 (two decimal places) for $120,000.00, or -120,000.00 for negative $120,000.00.

  3. What is the IRR for this project? %. Case sensitive. Type in 20.00 (two decimal places) for 20%.


Herbs Pty Ltd is considering investing in a new herb packaging machine. The machine is estimated to cost $80,000 which can last for 7 years before it becomes too costly to maintain and can be sold for scrap at $7,000. The project is estimated to bring in additional $20,000 cash inflow and incur $12,000 in additional expenses related to the running the machine in the first year. The company expects there will be an annual sales growth of 6% from year 2 onward. Expenses are also expected to grow by 3% annually from the second year of the operation.

The company plans to fund the purchase of the new machine using a bank loan with an interest rate of 9%.

  1. How long is the payback period for this project? years.

    Case sensitive. Type in 7.00 (two decimal places) for 7 years.

  2. What is the NPV for this project? $ .

    Case sensitive. Type in 120,000.00 (two decimal places) for $120,000.00, or -120,000.00 for negative $120,000.00.

  3. What is the IRR for this project? %.

    Case sensitive. Type in 20.00 (two decimal places) for 20%.


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