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Southern Manufacturing Limited is considering the investment of $81,000 in a new machine. The machine will generate cash flow of $11,000 per year for
Southern Manufacturing Limited is considering the investment of $81,000 in a new machine. The machine will generate cash flow of $11,000 per year for each year of its twelve-year life and will have a salvage value of $5,000 at the end of its life. The company's cost of capital is 10%. Table 6-4 and Table 6-5. Note: Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals. Required: a. Calculate the net present value of the proposed investment. (Ignore income taxes.) b. What will the internal rate of return on this investment be relative to the cost of capital? Complete this question by entering your answers in the tabs below. Required A Required B Calculate the net present value of the proposed investment. (Ignore Income taxes.) Note: Negative amount should be indicated by a minus sign. Net present value Required A Required B>
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