(NPV

with varying required rates of

return)

Big Steve's, a maker of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of

$120,000

and will generate free cash inflows of

$18,500

per year for

15

years.

a. If the required rate of return is

5

percent, what is the project's

NPV?

b. If the required rate of return is

15

percent, what is the project's

NPV?

c. Would the project be accepted under part

(a)

or

(b)?

d. What is the project's

IRR?