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Find simple rate of return and internal rate of return

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Question 1: DiamondCompany is considering purchasing a machine that would cost $756,000 and have a useful life of 8 years. The machine would reduce cash operating costs by $132,632 per year. The machine would have a salvage value of $151,200 at the end of the project. Compute:

a.Net present value

b. Internal rate of return

c.Profitability index

d.Payback period

e. Simplerate of return

f.Should the company purchase the machine? Why or why not?

 

 

Reference no: EM132649921

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