Question

3.

You buy a new piece of equipment for $12,539, and you receive a cash inflow of $2,100 per year for 8 years. Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method.

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

%

4.

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 $57,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

  

Year	Cash Flow
1	$ 21,000
2	24,000
3	28,000
4	14,000
5	9,000

  

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

Answer 1

aj py $12539 2 end