Decision on whether a project is accepted or rejected

Assignment Help Finance Basics

Reference no: EM1311214

Decision on whether a project is accepted or rejected using NPV and IRR.

The Danforth Tire Company is considering the purchase of a new machine that would increase the speed of manufacturing and save money. The net cost of this machine is $66,000. The annual cash flows have the following projections.

Year Cash flows
1      $21,000
2      $29,000
3      $36,000
4      $16,000
5      $8,000

A) If the cost of capital is 10 percent, what is the net present value?

B) What is the internal rate of return?

C) Should the project be accepted? Why?

Reference no: EM1311214

Questions Cloud

Absolute percentage error : Would you expect the mean absolute percentage error to be more than or less than 0.25? Describe.

Statement related to labor and wage theory : Suppose a frost kills a large portion of an orange crop, with a resulting higher price of oranges. It has been said that such an increase in price benefits no one since it cannot elicit a supply response; the higher price, it is said, simply "line..

Average cost per diner for serving : Convert the total costs you computed to costs per diner. Average cost per diner for serving each of the following parties A party of four diners who three drinks in total.

Distribution of data : Part 1. What is the appropriate distribution for such data? Part 2. Is this lot anomalous?

Decision on whether a project is accepted or rejected : Decision on whether a project is accepted or rejected using NPV and IRR and What is the internal rate of return

Find the total cost of serving : The activity-based costing system and find the total cost of serving each of the following parties of diners? a. A party of four diners who three drinks in total.

Profit maximizing behavior of natural monopoly : Compute total revenue, marginal revenue, marginal cost, and average total cost of this natural monopoly. What is the profit maximizing output and price for this natural monopoly when the government does not regulate it?

Designing a linear programming problem : Design a Linear programming problem for the flair Furniture Company and find the combination of tables and chairs that the company must produce to maximize profits.

Low-volume product under activity-based costing : Describe why overhead cost shifted from the high-volume product to the low-volume product under activity-based costing.

User Account

All Pages