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( Spreadsheet is the only acceptable submission format ) 1 . You are interested in buying a new machine that will increase the firm s

(Spreadsheet is the only acceptable submission format)
1. You are interested in buying a new machine that will increase the firms revenues and decrease its costs. The machine costs $125,000 today (time zero). It will provide positive cash flows of $55,000 in year 1, $35,000 in year 2 and $60,000 in year 3. The firms required rate of return (WACC or k) is 10%. Calculate the NPV, IRR and payback period of the investment. Should we invest?
2. You are interested in buying a new machine that will increase the firms revenues and decrease its costs. The machine costs $125,000 today (time zero). It will provide positive cash flows of $55,000 per year for 3 years. The firms required rate of return (k or WACC) is 12%. Calculate the NPV, IRR and payback period of the investment. Should we invest?
3. You are interested in buying a new machine that will increase the firms revenues and decrease its costs. The machine costs $250,000 today (time zero). It will provide positive cash flows of $100,000 in year 1, $120,000 in year 2 and $150,000 in year 3 and then a negative cash flow of $60,000 in year 4. The firms required rate of return (WACC or k) is 9%. Calculate the NPV, IRR and payback period of the investment. Should we invest?

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