Dave Hirsch publishes his own manuscripts and is unsure of which of two new printers he should

Question:

Dave Hirsch publishes his own manuscripts and is unsure of which of two new printers he should purchase. He is a novelist living in parkman, IL. Having slept through most of his finance 300 course in college, he is unfamiliar with cash flow analysis. He enlists the help of the finance professor at the local university, Dr Gwen Finch to assist him. Together they estimate the following expected initial investment ( a negative cash flow) and net positive cash flow for years 1 through 3 for each machine. Dave only needs one printer and estimates it will be worthless after 3 years of heavy use. Dave's required rate of return for this project is 10%

A.) Calculate the payback period for each printer
B.) Calculate the net present value for each printer
C.) Calculate the internal rate of return for each printer
D.) Which printer do you think Dr Finch will recommend? Why?
E.) Suppose Dave's required rate of return was 16%, does the decision about which printer to purchase change?

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...