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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 $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
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 $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 %
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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