Question
?(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?
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a. If the discount rate is 10 ?percent, then the? project's NPV is $_____.?(Round to the nearest? dollar.)
The project (Should not be or Should be) _____ accepted because the NPV is (Negative or Positive) ____ and therefore (Adds or Does not add) ____ value to the firm. ?(Select from the? drop-down menus.)?????
b. If the discount rate is 15 ?percent, then the? project's NPV is $_____.?(Round to the nearest? dollar.)
The project (Should be or Should not be) ____ accepted because the NPV is (Positive or Negative) ____ and therefore (Does not add or adds) ____ 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 (Should be or Should not be) ____ ?accepted, because the IRR is (Lower than or Higher than) ____ the required discount rate. ?(Select from the? drop-downmenus.)?????
If the? project's required discount rate is 15%,then the project (Should be or Should not be) ____ ?accepted, because the IRR is (Lower than or Higher than) ____ the required discount rate.?(Select from the? drop-down menus.)
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