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 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?



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  • CreatedOctober 31, 2014
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