Capital Budgeting Problem Exotic Woods, Inc. imports hardwoods for milling and sale to woodworkers. It is considering the purchase of a computerized planer/jointer machine
Capital Budgeting Problem Exotic Woods, Inc. imports hardwoods for milling and sale to woodworkers. It is considering the purchase of a computerized planer/jointer machine that will enable it to generate new revenues from new product offerings. The equipment will cost $82,000, plus shipping of $1,500 and installation of $6,200. The RRR appropriate for this project is 12%. Estimated incremental CFAT from operation and closure of the project at the end of the five-year life of the project are as follows: 2 $22,000 $33,000 $18,000 Evaluate this project by the NPV and IRR methods, taking care to properly organize your work. (10 pts) 3 $25,000 5 $53,000
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