Increase the speed of bottling and save money

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Reference no: EM131903994

The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $51,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year Cash Flow

1 $20,000

2 $23,000

3 $27,000

4 $13,000

5 $8,000

If the cost of capital is 12 percent, what is the net present value of selecting a new machine?

What is the internal rate of return?

Reference no: EM131903994

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