Question
Vandelay Industries is considering the purchase of a new metal lubrication machine. The machine will cost $1.4 million. It will generate a net after-tax cash
Vandelay Industries is considering the purchase of a new metal lubrication machine. The machine will cost $1.4 million. It will generate a net after-tax cash flow of $350.000 per year for six years. Vandelays cost of capital is 14 percent. (Show your work)
a. What is the NPV of this project
b. What is the IR of this project c. Is this project acceptable if Vandelay uses the payback method with a 4-year payback requirement. d. If Vandelay uses discounted payback with a 5-years requirement, is this project acceptable?
e. Based on your answers above, is this a good project?
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