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Pan American Bottling Co. is considering the purchase of a new machine that would increase bottling speed and save money. The net cost of this

Pan American Bottling Co. is considering the purchase of a new machine that would increase bottling speed and save money. The net cost of this machine is $66,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

YearCash flow
1ps26,000
227,000
330,000
418,000
511,000


a. If the cost of capital is 7 percent, what is the net present value of selecting a new machine? 

(Do not round intermediate calculations and round your final answer to 2 decimal places.)



b. What is the internal rate of return? 

(Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.)


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