What is the internal rate of return

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Reference no: EM13265472

The Pam American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The new cost of this machine is $45,000. The annual cash flows have the following projections.

Year Cash flow

1 $15,000

2 $20,000

3 $25,000

4 $10,000

5 $5,000

a. If the cost of capital is 10%, what is the net present value of selecting a new machine?

b. What is the internal rate of return (IRR)?

c. Should the project be accepted? Why?

Reference no: EM13265472

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