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What is the irr for this project

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Question - Vitalife Pty Ltd is considering buying a new vitamin C extraction machine. The machine is estimated to cost $140,000 which can last for 7 years before it becomes too costly to maintain and can be sold for scrap at $20,000. The project is estimated to bring in additional $27,000 cash inflow and incur $12,000 in additional expenses related to the running the machine in the first year. The company expects there will be an annual sales growth of 6% from year 2 onward. Expenses are also expected to grow by 3% annually from the second year of the operation.

The company plans to fund the purchase of the new machine using a bank loan with an interest rate of 11%.

1. How long is the payback period for this project?

2. What is the NPV for this project?

3. What is the IRR for this project?

Reference no: EM132725373

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