Question
The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net
The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $54,000. The annual cash flows have the following projections. UseAppendix BandAppendix Dfor an approximate answer but calculate your final answer using the formula and financial calculator methods.
YearCash Flow
1 $22,000
2 25,000
3 28,000
4 14,000
5 7,000
a.If the cost of capital is 12 percent, what is the net present value of selecting a new machine?(Do not round intermediate calculations and round your final answer to 2 decimal places.)
b.What is the internal rate of return?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
c.Should the project be accepted?
YesNo
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