Internal rate of return-irr-kingston corporation

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Kingston Corporation is considering a new machine that requires an initial investment of $550,000, including installation costs, and has a useful life of eight years. The expected annual after-tax cash flows for the machine are $89,000 during the first three years, $95,000 during years four through six, and $105,000 during the last two years.

-(a) Calculate the internal rate of return-IRR (round your answer to two decimal places).

-(b) Calculate the net present value-NPV-at the following required rates of return (round your

-answers to two decimal places):

-(1) 3% (2) 4% (3) 8% (4) 9%

-(c) Using the IRR and NPV criterion, comment if the projects should be accepted or rejected at the following required rates of return:

-(1) 3% (2) 4% (3) 8% (4) 9%

-(d) Plot the NPV profile (NPV on the Y-axis and the required rates of return on the X-axis).

Reference no: EM132664073

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