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Question: 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 $45,000. The annual cash flows have the following projections:

Year Cash Flow

1 $15,000

2 20,000

3 25,000

4 10,000

5 5,000

a. If the cost of capital is 10 percent, what is the net present value of selecting a new machine?

b. What is the internal rate of return?

c. Should the project be accepted? Why?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92597103

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