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 outlay
(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 $95,000 and will generate net cash inflows of $17,000 per year for 8 years.
a.What is the project's NPV using a discount rate of 11 percent? Should the project be accepted? Why or why not?
b.What is the project's NPV using a discount rate of 16 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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Introduction to Management Science
Authors: Bernard W. Taylor
11th Edition
978-0132751919
