The Pan American Bottling Company 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 $72,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 35,000 2 38,000 3 35,000 4 28,000 5 12,000 If the cost of capital is 12 percent, what is the net present value of selecting a new machine? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. What is the internal rate of return? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Should the project be accepted? multiple choice Yes No
The Pan American Bottling Company 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 $72,000. The annual
| Year | Cash Flow |
|---|---|
| 1 | $ 35,000 |
| 2 | 38,000 |
| 3 | 35,000 |
| 4 | 28,000 |
| 5 | 12,000 |
If the cost of capital is 12 percent, what is the
Note: Do not round intermediate calculations and round your final answer to 2 decimal places.
What is the
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
Should the project be accepted?
multiple choice
Yes
No
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