Question
Herbs PtyLtd is considering investing in a new herb packaging machine. The machine is estimated to cost $250,000 which can last for 7 years before
Herbs PtyLtd is considering investing in a new herb packaging machine. The machine is estimated to cost $250,000 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 $12,000inadditionalexpensesrelated to the running the machine in the first year. The company expects there will be an annual sales growthof 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%.
- How long is the payback period for this project?years.Case sensitive. Type in 7.00 (two decimal places) for 7 years.
- 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.
- What is the IRR for this project?%.Case sensitive. Type in 20.00 (two decimal places) for 20%.
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