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Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of
$110,000
and will generate net cash inflows of
$19,000
per year for
9
years.
a.What is the project's NPV using a discount rate of
8
percent?
Should the project be accepted? Why or why not?
b.What is the project's NPV using a discount rate of
14
percent? Should the project be accepted? Why or why not?
c.What is this project's internal rate of return? Should the project be accepted? Why or why not?
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