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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

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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 $55,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 2 Cash Flow $28,000 26,000 26,000 31,000 12,000 a. If the cost of capital is 15 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.) Net present value b. What is the internal rate of retum? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal rate of return % c. Should the project be accepted? Yes O No

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