A small industrial machine costs $124,000 and is expected to earn annual net cash inflows of $54,600,
Question:
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 for an estimated $12,400.
Required
a. If funds earn 11 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.
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a NPV is 10160 IRR is 0834 b NPV is ...View the full answer
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