Exercise 24-19 (Algo) Net present value; internal rate of return; equal cash flows LO P3, P4

Quary Company is considering an investment in machinery with the following information. The companys required rate of return is 14%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Initial investment	$ 300,000		Materials, labor, and overhead (except depreciation)	$ 63,000
Useful life	8	years	DepreciationMachinery	30,000
Salvage value	$ 30,000		Selling, general, and administrative expenses	23,000
Expected sales per year	12,000	units	Selling price per unit	$ 13

a. Compute the investments net present value. b. Using the answer from part a, is the investments internal rate of return higher or lower than 14%?

Compute the investments net present value. (Negative net present values should be indicated with a minus sign. Round your present value factor to 4 decimals. Round your answers to the nearest whole dollar.)

	Net Cash Flows	x	Present Value	=	Present Value of Net Cash Flows
Years 1-8				=
Year 8 salvage				=
Totals

Using the answer from part a, is the investments internal rate of return higher or lower than 14%? Hint: It is not necessary to compute the IRR to answer this question.

Is the internal rate of return higher or lower than 14%?