Quinn Industries is considering the purchase of a machine that would cost $420,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $92,500. The machine would reduce labor and other costs by $88,000 per year. The company requires a minimum pretax return of 14% on all investment projects. (Ignore income taxes.)

Required:

Compute the net present value of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to the nearest dollar and use a minus sign for negative numbers.

Excel / calculator input:

Interest Rate (Rate, I, I/YR)

%

Nper, N

PMT

$

PV

$

FV

$

Net Present Value (NPV)

$

Required:

Compute the internal rate of return of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to one decimal place and use a minus sign for negative numbers.

Excel / calculator input:

Interest Rate (Rate, I, I/YR)

%

Nper, N

PMT

$

PV

$

FV

$

Internal Rate of Return (IRR)

%