# (Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase of a new...

## Question:

(Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $105,000 and will generate net cash inflows of $21,000 per year for 11 years.

a. What is the project's NPV using a discount rate of 9 percent? Should the project be accepted? Why or why not?

b. What is the project's NPV using a discount rate of 13 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?

a. If the discount rate is 9 percent, then the project's NPV is $E. (Round to the nearest dollar.)

b. If the discount rate is 13 percent, then the project?s NPV is $. (Round to the nearest dollar.)

c. This project?s internal rate of return is %. (Round to two decimal places.)

**Related Book For**

## Engineering Economy

ISBN: 978-0132554909

15th edition

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling