Big Steves, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This

Question:

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

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...