Question
Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $105,000 and
Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $105,000 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 7 percent? Should the project be accepted? Why or why not?
b. What is the project's NPV using a discount rate of 14percent? Should the project be accepted? Why or why no?
c . What is this project's internal rate of return? Should the project be accepted? Why or why not?
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Accounting concepts and applications
Authors: Albrecht Stice, Stice Swain
11th Edition
978-0538750196, 538745487, 538750197, 978-0538745482
