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(NPV with varying required rates of return) Big Steve's, a maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This
(NPV with varying required rates of return) Big Steve's, a maker 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 free cash inflows of $20,000 per year for 10 years. a. If the required rate of return is 5 percent, what is the project's NPV? b. If the required rate of return is 20 percent, what is the project's NPV? c. Would the project be accepted under part (a) or (b)? d. What is the project's IRR? a. If the required rate of return is 5 percent, the project's NPV is $(Round to the nearest cent.) b. If the required rate of return is 20 percent, the project's NPV is 5 (Round to the nearest cent.) c. Based on the NPV criterion, the project under part (a) should be because its NPV is if the required rate of return is 5 percent. (Select from the drop-down menus.) Based on the NPV criterion, the project under part (b) should be because its NPV is if the required rate of return is 20 percent. (Select from the drop-down menus.) d. The project's IRR is%. (Round to two decimal places.)
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