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X Company is considering the purchase of a new machine. The machine would reduce the amount of part-time labor, at a cost savings of
X Company is considering the purchase of a new machine. The machine would reduce the amount of part-time labor, at a cost savings of $19,490 per year. In addition, the machine would enable the company to increase production and sales of one of its products by 2,400 units; contribution margin of this product is $5.40 per unit. The machine would cost $150,000, last for four years, and have zero salvage value at the end of its life. 8. Assuming a discount rate of 7%, what is the net present value of buying the new machine? A: $-16,422 B: $-20,527 C: $-25,659 D: $-32,073 E: $-40,092 F: $-50,115 Submit Answer Tries 0/99 9. If the new machine will last for six years instead of four, what is the approximate internal rate of return of buying it? A: 0.03 B: 0.04 C: 0.05 D: 0.06 E: 0.07 F: 0.08 Submit Answer Tries 0/99
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