Company is thinking about buying new machine

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Reference no: EM132036966

Baxwell tire company is thinking about buying a new machine that will increase the speed of manufacturing and save money. The net cost of the machine is $66,000. The annual cash flows are projected as follows:

Year Cash Flow

1 $21,000

2 $ 29,000

3 $ 36,000

4 $ 16,000

5 $ 8,000

A. If the cost of capital is 10%, what is the net present value?

B. What is the internal rate return?

C. Should the project be accepted? Why?

Reference no: EM132036966

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