What is the internal rate of return

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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 $69,000. The annual cash flows have the following projections. Calculate your final answer using the formula and financial calculator methods.

Year Cash Flow

1 $32,000

2 37,000

3 34,000

4 27,000

5 13,000

a. If the cost of capital is 11 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value

b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal rate of return %

c. Should the project be accepted? Yes No

Reference no: EM133073201

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