Problembig steves makers of swizzle sticks is considering, Ask an Expert

Accounting

Problem:

Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an intial outlay of $95,000 and will generate net cash inflows of $19,000 per year for 11 years.

Requirement:

Question 1: What is the project's NPV using a discount rate of 7%? Should the project be accepted? Why or why not?

Question 2: What is the project's NPV using a discount rate of 13%? Should the project be accepted? Why or why not?

Question 3: What is this project's internal rate of return? Should the project be accepted? Why or why not?

Note: Please show basic calculation

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169872

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