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The management of Monster Manufacturing Company are evaluating several capital projects. One project would cost the company $45,000 for the purchase of a new machine designed that is expected to cut operating costs by $9,000 per year for the next eight years. At the end of the project's life, the machine could be sold for $5,000. The company uses 10% as the required rate of return for projects of this nature and they initially do not include the effect of taxes on the project.


A) Determine the net present value of the investment in the machine

B) Determine the project internal rate of return.

C) Based on your asnwers to A and B, would you recommend that Monster Manufacturing move forward with this project? Why? describe.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M938491

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