A company is considering purchasing a new machine for $50,000 that is expected to generate net cash
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Question:
A company is considering purchasing a new machine for $50,000 that is expected to generate net cash flows of $15,000 per year for the next five years. The company's cost of capital is 8%.
a) Calculate the payback period of the investment.
b) Calculate the internal rate of return (IRR) of the investment.
c) Based on the payback period and IRR, should the company make the investment?
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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