PLEASE ANSWER PART B!

Bramble Company manufactures automobile components for the worldwide market. The company has three large production facilities in Virginia, New Jersey, and California, which have been operating for many years. Brett Harker, vice president of production, believes it is time to upgrade operations by implementing computer-integrated manufacturing (CIM) at one of the plants. Brett has asked corporate controller Connie Carson to gather information about the costs and benefits of implementing CIM. Carson has gathered the following data:

Initial equipment cost		$	7,500,000
Working capital required at start-up		$	500,000
Salvage value of existing equipment		$	93,750
Annual operating cost savings		$	1,050,000
Salvage value of new equipment at end of its useful life		$	250,000
Working capital released at end of its useful life		$	500,000
Useful life of equipment			10 years

Bramble Company uses a 12% discount rate. Click here to view the factor table.

(a)

Correct answer iconYour answer is correct.

Calculate the net present value of Brambles proposed investment in CIM. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971. Enter negative amounts using a negative sign preceding the number, e.g. -59,991 or parentheses, e.g. (59,991).)

Net present value

$enter the net present value in dollars rounded to 0 decimal places

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(b)

Use Excel or a similar spreadsheet application to calculate the internal rate of return on Brambles proposed investment. (Round internal rate of return to 2 decimal places, e.g. 15.25%.)

Internal rate of return

enter internal rate of return in percentages rounded to 2 decimal places %