Rework Problem $8\mathrm{.}12$ if the interest rate is $($a$)15\%$ per year, $($b$)25\%$ per year, compounded annually.

Am$.($a$)$ NPVA $=-$$$1450\mathrm{.}60,$ NPVs $=$ $$2983\mathrm{.}17($buy model B$).($b$)$ Neither model is economically

acceptable; both have negative net present values.

Problem$8\mathrm{.}12$ : The ABC Company is considering the purchase of a new sanding machine; machine models A

and B are available. Both models have a five$-$year life, and their cash flows are as given in

Table $8-2.$ The interest rate is $10\%$ per year, compounded annually. Which model should ABC

buy? Table $8-2$ : End of Year : $0,1,2,3,4$: Cash Flows: Model A: $-$$$30000,10000,10000,10000,10000$ End of Year : $0,1,2,3,4$: Cash Flows: Model B: $-$$$30000,30000,5000,3000,2000.$ You are to do this problem Rework Problem $8\mathrm{.}12$ if the interest rate is $($a$)15\%$ per year, $($b$)25\%$ per year, compounded annually.

Answer. $($a$)$ NPVA $=-$$$1450\mathrm{.}60,$ NPVs $=$ $$2983\mathrm{.}17($buy model B$).($b$)$ Neither model is economically

acceptable; both have negative net present values. Please using this formula: NPV $=-|$CFo$|+$ A$*($P$/$A or P$/$F$,$ i$\%,$ n$)$