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 $60,000. 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 Cash Flow 1 $ 23,000 2 26,000 3 29,000 4 15,000 5 8,000 a. If the cost of capital is 13 percent, what is the net present value of selecting a new machine? b. What is the internal rate of return?
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 $60,000. 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 Cash Flow 1 $ 23,000 2 26,000 3 29,000 4 15,000 5 8,000 a. If the cost of capital is 13 percent, what is the net present value of selecting a new machine? b. What is the internal rate of return?
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
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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 $60,000. 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 | Cash Flow | ||
| 1 | $ | 23,000 | |
| 2 | 26,000 | ||
| 3 | 29,000 | ||
| 4 | 15,000 | ||
| 5 | 8,000 | ||
a. If the cost of capital is 13 percent, what is the
b. What is the
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