NPV and IRR The first two scenarios are independent. All cash flows are after-tax cash flows. The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $800,000 per year. The system costs $4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Amy Wetzel has just invested $270,000 in a restaurant specializing in German food. She expects to receive $43,470 per year for the next eight years. Her cost of capital is 5.5 percent. Compute the internal rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16" in the answer box).fill in the blank 3 % Did Amy make a good decision? 3. For each of the previous two requirements, choose the data analytic type that applies and explain why (descriptive, diagnostic, predictive, or prescriptive). Note: More than one analytic type might apply. See Exhibits 2.5 and 2.6, pp. 37, 40, for a brief review of data analytics.
NPV and IRR
The first two scenarios are independent. All cash flows are after-tax cash flows.
The
Required:
1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $800,000 per year. The system costs $4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent.
Should the company buy the new system?
2. Amy Wetzel has just invested $270,000 in a restaurant specializing in German food. She expects to receive $43,470 per year for the next eight years. Her cost of capital is 5.5 percent. Compute the
fill in the blank 3 %
Did Amy make a good decision?
3. For each of the previous two requirements, choose the data analytic type that applies and explain why (descriptive, diagnostic, predictive, or prescriptive). Note: More than one analytic type might apply. See Exhibits 2.5 and 2.6, pp. 37, 40, for a brief review of data analytics.
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