ces The Pan American Bottling Company 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 $57,000. 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 4 Cash Flow $ 21,000 24,000 28,000 14,000 9,000 a. If the cost of capital is 11 percent, what is the net present value of selecting a new machine? Note: 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? Note: Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return %6
ces The Pan American Bottling Company 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 $57,000. 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 4 Cash Flow $ 21,000 24,000 28,000 14,000 9,000 a. If the cost of capital is 11 percent, what is the net present value of selecting a new machine? Note: 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? Note: Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return %6
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
Related questions
Question
None
Transcribed Image Text:ces
The Pan American Bottling Company 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 $57,000. 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
4
Cash Flow
$ 21,000
24,000
28,000
14,000
9,000
a. If the cost of capital is 11 percent, what is the net present value of selecting a new machine?
Note: 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?
Note: Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Internal rate of return
%6
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education