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 $66,000. 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. Year 1 2 3 5 Cash Flow $26,000 27,000 10,000 18,000 11,000 a. If the cost of capital is 7 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value b. What is the internal rate of setur? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to places.) Internal rate of return c. Should the project be accepted? O Yes O No decima
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 $66,000. 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. Year 1 2 3 5 Cash Flow $26,000 27,000 10,000 18,000 11,000 a. If the cost of capital is 7 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value b. What is the internal rate of setur? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to places.) Internal rate of return c. Should the project be accepted? O Yes O No decima
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
Section: Chapter Questions
Problem 1PS
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Subject:- finance
Transcribed Image Text: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 $66,000. 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.
Year
2
3
5
Cash Flow
$26,000
27,000
30,000
18,000
11,000
a. If the cost of capital is 7 percent, what is the net present value of selecting a new machine? (Do not round intermediate
calculations and round your final answer to 2 decimal places.)
Net present value)
b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal
places.
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
c. Should the project be accepted?
O Yes
O No
%
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