Problem 12-18 Net present value and internal rate of return methods [LO12-4] The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $55,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Cash Flow $28,000 26,000 26,000 31,000 12,000 Year 1 2 3 5 a. If the cost of capital is 15 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round yotr final answer to 2 decimal places.) Net present value This is a numeric cell, so please enter numbers only. b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal rate of return % 1 PV= FV (1+ n Present value of $1, PV/F Appendix B +i Percent 4% Period 12% 1% 2% 3% 5% 6% 7% 8% 9% 10% 11% 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.980 0.812 2 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.797 0.889 0.864 3 0.971 0.942 0.915 0.840 0.816 0.794 0.772 0.751 0.731 0.712 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.747 0.951 0.906 0.681 0.593 0.567 5 0.863 0.822 0.784 0.713 0.650 0.621 6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.933 0.513 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.482 0.452 0.627 0.467 0.434 0.404 8 0.923 0.853 0.789 0.731 0.677 0.582 0.540 0.502 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.744 10 0.905 0.820 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.896 0.804 0.722 0.650 0.429 0.350 11 0.585 0.527 0.475 0.388 0.317 0.287 O.625 0.497 0.286 0.257 12 0.887 0.788 0.701 0.557 0.444 0.397 0.356 0.319 13 0.530 0.368 0.326 0.229 0.879 0.773 0.681 0.601 0.469 0.415 0.290 0.258 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 17 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 18 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.828 19 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 20 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 25 0.780 0.610 0.478 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.075 30 0.742 0.552 0.412 0.308 0.231 0.174 0.131 0.099 0.057 0.044 0.033 40 0.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.228 50 0.608 0.372 0.141 0.087 0.054 0.034 0.021 0.013 0.009 0.005 0.003