Question: A small industrial printer costs $50000 and is expected to earn annual net cash inflows of $22000, $20000, $18 000 and $16 000, before it

A small industrial printer costs $50000 and is expected to earn annual net cash inflows of $22000, $20000, $18 000 and $16 000, before it wears out sufficiently to be unreliable and must be sold for an estimated $5000.
a. If funds earn 10 per cent, what is its NPV?
b. If funds earn 15 per cent, what is its NPV?
c. What is the IRR for the machine?
d. Advise management on the purchase of the machine.

Step by Step Solution

★★★★★

3.36 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

c By trial and error approximately 22 d The advice woul... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

862-B-A-G-F-A (8596).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

The Taylor Company Limited reported a cost of goods sold of $640,000 last year, when 20,000 units were produced and sold. The cost of goods sold was 35% materials, 42% direct labour, and 23%...

On June 15,201 1, a second-hand machine was purchased for$77,000. Before being put into service, the equipment was overhauled at a cost of$5,200, and additional costs of $400 for direct material and...

On June 15, 2014, a second-hand machine was purchased for $77,000. Before being put into service, the equipment was overhauled at a cost of $5,200, and additional costs of $400 for direct material...

A small industrial machine costs $ 2 2 0 , 0 0 0 and is expected to earn annual net cash inflows of $ 7 5 , 0 0 0 , $ 8 7 , 0 0 0 , $ 9 4 , 0 0 0 and $ 8 9 , 0 0 0 , before it wears out sufficiently...

A small industrial machine costs $136000 and is expected to earn annual net cash inflows of $58200, $52600, $49500 and $42100, before it wears out sufficiently to be unreliable and must be sold for...

A small industrial machine costs $124,000 and is expected to earn annual net cash inflows of $54,600, $49,600, $44,600 and $39,700, before it wears out sufficiently to be unreliable and must be sold...

small industrial machine costs $86,000 and is expected to earn annual net cash inflows of $37,800, $34,400, $31,000 and $27,500, before it wears out sufficiently to be unreliable and must be sold for...

A small industrial machine costs $80,000 and is expected to earn annual net cash inflows of $35,200, $32,000, $28,800 and $25,600, before it wears out sufficiently to be unreliable and must be sold...

A small industrial machine costs $114,000 and is expected to earn annual net cash inflows of $50,200, $45,600, $41,000 and $36,500, before it wears out sufficiently to be unreliable and must be sold...

Given the graph of a degree 5 polynomial below, complete the table of values for either the x-value of a zero, or the multiplicity of the zero. Write roots in order from least to greatest. Root with...

Four-drive theory is conceptually different from Maslows needs hierarchy (as well as ERG theory) in several ways. Describe these differences. At the same time, needs are based on drives, so the four...

The Financial Times reported on 1 2 February 2 0 2 4 : Diamondback Energy has agreed to buy Endeavor Energy Resources in a $ 2 6 bn deal, beating ConocoPhillips in a race for one of America s most...

Which of the following defines the total scope of the project and represents the work specified in the current approved project scope statement? Work Breakdown Structure (WBS) Bill of Material (BOM)...

Which of the following accounts would appear only in an accrual basis accounting system, and which could appear in either a cash basis or an accrual basis accounting system? (a) Capital Stock, (b)...

If the effect of an adjustment is to increase the balance of a liability account, which of the following statements describes the effect of the adjustment on the other account? a. Increases the...

Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 10-year, $1,000-par-value bonds paying annual interest at a 14% coupon rate. Because current...

The market value of securities and the current liabilities for a mutual fund are $483 450 000 and $18 070 900, respectively. What is the net asset value per share (NAVPS) for this mutual fund if...