A company is considering purchasing a new second machine inorder to expand their business. The information for the new machineis:
Cost= $100,000
Increase in contribution margin= $25,000
Life of the machine= 5 years
Required rate of return = 10%
Calculate the following:
a. Net present value(NPV) (Use factors to three decimal places, X.XXX, and usea minus sign or parentheses for a negative net present value. Enterthe net present value of the investment rounded to the nearestwhole dollar)
b. Payback period(Round your answer to two decimal places.)
c. Discounted paybackperiod (Round interim calculations to the nearest wholedollar. Round the rate to two decimal places, X.XX%.)
d. Internal rate ofreturn (Round the rate to two decimal places, X.XX%.)
e. Accrual accounting rate ofreturn based on net initial investment (Round interimcalculations to the nearest whole dollar. Round the rate to twodecimal places, X.XX%.
