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Delta inc is considering the investment of 75000 in a new

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Delta, Inc. is considering the investment of $75,000 in a new machine. The machine will generate cash flow of $16,800 per year for each year of its seven-year life and will have a salvage value of $12,000 at the end of its life. Delta Inc.'s cost of capital is 14% percent.

(a.) Calculate the net present value of the proposed investment. Ignore income taxes, and round all answers to the nearest $1.

(b.) What will the internal rate of return on this investment be relative to the cost of capital (higher, lower, or the same)?

Reference no: EM13608621

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