A company is considering the purchase of a machine for $100,000.Buying the machine would save...
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Accounting
A company is considering the purchase of a machine for $100,000.Buying the machine would save the company running cost of $25,000 each year for five years.At the end of this time,the machine could be sold off for $12000.The company has a cost of capital 9%
Required:
(a) Calculate the NPV of the project at the company's cost of capital 9%.
(b) Calculate the NPV of the project at a cost of capital of 12%.
(c) Use the two NPV figures you have calculated to estimate the IRR of the project.
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