What is the net present value of selecting new machine

Assignment Help Financial Management

Reference no: EM131178275

Pan bottling co is considering purchasing a new machine to increase the speed of bottling and save money. The net cost of the machine is $60,000. The annual cash flows have the following projections:

Year 1 cash flow $23,000

Year 2 cash flow $26,000

Year 3 cash flow $29,000

Year 4 cash flow $15,000

Year 5 cash flow $8,000

A. If the cost of capital is 13%, what is the net present value of selecting a new machine?

B. What is the internal rate of return? Please show work

C. Should the project be accepted and why?

Reference no: EM131178275

Questions Cloud

Identify at least five books and multimedia materials : Describe insights you have gained about what it means to be an early childhood professional. Explain how those insights can make you a stronger professional in the future and help you to benefit young children and families with whom you may work.

Positive accounting profits : Suppose that Jamie's estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits? positive economic profit?

Compute net present value of project : The Acu Punct Corporation is considering the purchase of a new machine with an initial outlay of $4,500 and expected cash flows in years 1-4 of $2,200. The certainty equivalent coefficient for each period is 0.87. The appropriate discount rate for th..

Describe the initial set-up of the market : (a) Describe the initial set-up of the market; (b) Analyse the effects of the local policy on the market in the short-run;

What is the net present value of selecting new machine : Pan bottling co is considering purchasing a new machine to increase the speed of bottling and save money. The net cost of the machine is $60,000. If the cost of capital is 13%, what is the net present value of selecting a new machine? What is the int..

Decision will affect the value of the firm : Suppose that the manager of a firm, that uses coal energy, decides to install new equipment that will reduce air pollution like acid rain. Explain how this decision will affect the value of the firm.

What is mcworld and what does mcworld culture promote : What is "McWorld" and what dose the "McWorld" culture promote? what are some issues with fast food restaurant in relation to globalization?

What is the implied return on company stock over next year : Sully Corp. currently has an EPS of $2.38, and the benchmark PE ratio for the company is 17. Earnings are expected to grow at 7.5 percent per year. Current Stock price is $40.46; target stock price in one year $43.52; Assuming that the company pays n..

Calculate the appropriate discount rate : Calculate the project's initial Time 0 cash flow.- Calculate the appropriate discount rate to use when evaluating DEI's project.

User Account

All Pages