# Question: Big Steve s makers of swizzle sticks is considering the purchase

Big Steve’s, makers 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 net cash inflows of $18,000 per year for 10 years.

a. What is the project’s NPV using a discount rate of 10 percent? Should the project be accepted? Why or why not?

b. What is the project’s NPV using a discount rate of 15 percent? Should the project be accepted? Why or why not?

c. What is this project’s internal rate of return? Should the project be accepted? Why or why not?

a. What is the project’s NPV using a discount rate of 10 percent? Should the project be accepted? Why or why not?

b. What is the project’s NPV using a discount rate of 15 percent? Should the project be accepted? Why or why not?

c. What is this project’s internal rate of return? Should the project be accepted? Why or why not?

**View Solution:**## Answer to relevant Questions

Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm’s new plasma cutter shop. The two alternatives that are denoted A and B below perform the ...Determine the internal rate of return to the nearest percent on the following projects:a. An initial outlay of $10,000 resulting in a cash inflow of $2,000 at the end of Year 1, $5,000 at the end of Year 2, and $8,000 at the ...Microwave Oven Programming, Inc. is considering the construction of a new plant. The plant will have an initial cash outlay of $7 million (CF0 = −$7 million), and will produce cash flows of $3 million at the end of Year ...You are considering a project with an initial cash outlay of $80,000 and expected cash flows of $20,000 at the end of each year for six years. The discount rate for this project is 10 percent.a. What are the project’s ...Captain's Cereal is considering introducing a variation of its current breakfast cereal, Crunch Stuff. This new cereal will be similar to the old, with the exception that it will contain sugar-coated marshmallows shaped in ...Post your question