The Pan American Bottling Co. is considering the purchase of a new machine the would increase...
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The Pan American Bottling Co. is considering the purchase of a new machine the would increase the speed of bottking and save money. The net cost pf this machine is $45,000. The annual cash flows have the following projections: Year 1 2 3 4 5 Cash Flow $ 15,000 20,000 25,000 10,000 5,000 a. If the cost of capital is 10 percent, what is the net present value of selecting a new machine? b. What is the internal rate of return? c. Should the project be accepted? Why? The Pan American Bottling Co. is considering the purchase of a new machine the would increase the speed of bottking and save money. The net cost pf this machine is $45,000. The annual cash flows have the following projections: Year 1 2 3 4 5 Cash Flow $ 15,000 20,000 25,000 10,000 5,000 a. If the cost of capital is 10 percent, what is the net present value of selecting a new machine? b. What is the internal rate of return? c. Should the project be accepted? Why?
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a To calculate the net present value NPV of selecting a new machine we need to discount each cash fl... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Posted Date:
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