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(Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial
(Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $100,000 and will generate net cash inflows of $18,000 per year for 10 years. a. What is the project's NPV using a discount rate of 10 percent? Should the project be accepted? Why or why not? b. What is the project's NPV using a discount rate of 15 percent? Should the project be accepted? Why or why not? c. What is this project's internal rate of return? Should the project be accepted? Why or why not? value to the firm. (Select from the drop-down menus.) a. If the discount rate is 10 percent, then the project's NPV is $ The project accepted because the NPV is b. If the discount rate is 15 percent, then the project's NPV is $ The project Vaccepted because the NPV is . (Round to the nearest dollar.) and therefore . (Round to the nearest dollar.) and therefore value to the firm. (Select from the drop-down menus.) c. This project's internal rate of return is %. (Round to two decimal places.) If the project's required discount rate is 10%, then the project accepted, because the IRR is V the required discount rate. (Select from the drop-down menus.) If the project's required discount rate is 15%, then the project Vaccepted, because the IRR is V the required discount rate. (Select from the drop-down menus.)
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