Big​ Steve's, makers of swizzle​ sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of ​$90,000 and will generate net cash inflows of ​$19,000 per year for 8 years.   a.  What is the​ project's NPV using a discount rate of 9 percent​? Should the project be​ accepted? Why or why​ not? b.  What is the​ project's NPV using a discount rate of 17 ​percent? Should the project be​ accepted? Why or why​ not? c.  What is this​ project's internal rate of​ return? Should the project be​ accepted? Why or why​ not? a.  If the discount rate is 9 ​percent, then the​ project's NPV is ​$nothing. ​(Round to the nearest​ dollar.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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(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
​$90,000
and will generate net cash inflows of
​$19,000
per year for
8
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
17
​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
​$nothing.
​(Round to the nearest​ dollar.)
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