Required:
1a.	Minden Companys required rate of return is 11%. The company can purchase a new machine at a cost of $40,100. The new machine would generate cash inflows of $14,000 per year and have a eight-year life with no salvage value. Compute the machines net present value. (Any cash outflows should be indicated by a minus sign. Round discount factor(s) to 3 decimal places and intermediate answers to the nearest dollar amount.)

Item	Year(s)	Amount of Cash Flows	11% Factor	Present Value of Cash Flows
Initial investment	Now
Annual cash inflows	1-8
Net present value

1b.

Is the machine an acceptable investment?

	Yes
	No

2.

Leven Products, Inc., is investigating the purchase of a new grinding machine that has a projected life of 13 years. It is estimated that the machine will save $40,000 per year in cash operating costs. What is the machines internal rate of return if it costs $270,000 new? (Round discount factor(s) to 3 decimal places.)

Internal rate of return

%

3a.

Sunset Press has just purchased a new trimming machine that cost $31,608. The machine is expected to save $4,500 per year in cash operating costs and to have a 10-year life. Compute the machines internal rate of return. (Round discount factor(s) to 3 decimal places.)

Internal rate of return

6

%

3b.

If the companys required rate of return is 16%, did it make a wise investment?

Yes