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Consider each case below independently. (Ignore in...

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Consider each case below independently. (Ignore income taxes.) (refer to attached tables) 8. Required: 1a. Minden Company?s required rate of return is 15%. The company can purchase a new machine at a cost of $40,350. The new machine would generate cash inflows of $15,000 per year and have a four-year life with no salvage value. Compute the machine?s net present value. (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Net present value $ 1b. Is the machine an acceptable investment? Yes No check my work 9. 2. Leven Products, Inc., is investigating the purchase of a new grinding machine that has a projected life of 15 years. It is estimated that the machine will save $20,000 per year in cash operating costs. What is the machine?s internal rate of return if it costs $111,500 new? (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return % check my work 10. 3a. Sunset Press has just purchased a new trimming machine that cost $14,125. The machine is expected to save $2,500 per year in cash operating costs and to have a 10-year life. Compute the machine?s internal rate of return. (Round discount factor(s) to 3 decimal places and final answer to the closest interest rate. Omit the "%" sign in your response.) Internal rate of return % 3b. If the company?s required rate of return is 16%, did it make a wise investment? Yes No

 

Paper#10019 | Written in 18-Jul-2015

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