You purchase a machine. It costs $75,000 and will expand cash flow by $1,000 /month in year 1 growing by 2% per year after that. The system will work for 10 years before you have to replace it. What are the NPV (at a 3.3% discount rate) and IRR? The vendor offers you another machine costing $100,000 and lasting 12 years, with the same cash flow gains and a 3% growth rate. What are the NPV and the IRR for it? Should you get it?

You purchase a machine. It costs $75,000 and will expand cash flow by $1,000 /month in year 1 growing by 2% per year after that. The system will work for 10 years before you have to replace it. What are the NPV (at a 3.3% discount rate) and IRR? The vendor offers you another machine costing $100,000 and lasting 12 years, with the same cash flow gains and a 3% growth rate. What are the NPV and the IRR for it? Should you get it?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 3EA: If a copy center is considering the purchase of a new copy machine with an initial investment cost...

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