Question

Big Steve’s, a maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $ 100,000 and will generate free cash inflows of $ 18,000 per year for 10 years.
a. If the required rate of return is 10 percent, what is the project’s NPV?
b. If the required rate of return is 15 percent, what is the project’s NPV?
c. Would the project be accepted under part (a) or (b)?
d. What is the project’s IRR?


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  • CreatedSeptember 11, 2015
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