Question
The Green Goddess Company is considering the purchase of a new machine that would increase the speed of manufacturing tires and save money. The net
The Green Goddess Company is considering the purchase of a new machine that would increase the speed of manufacturing tires and save money. The net cost of the new machine is $55,000. The annual cash flows have the following projections. (Use a Financial calculator to arrive at the answers.)
| Year | Cash Flow | |
| 1 | $29,000 |
|
| 2 | 27,000 |
|
| 3 | 27,000 |
|
| 4 | 32,000 |
|
| 5 | 10,000 |
|
a. If the cost of capital is 9 percent, what is the NPV? (Round the final answer to the nearest whole dollar.)
NPV $
b. What is the IRR? (Round the final answer to 2 decimal places.)
IRR %
c. Should the project be accepted?
Yes
No
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
