The Pan American Bottling Company is considering the purchase of a new machine that would increase the speed of bottling and savemoney. The net cost of this machine is $57,000. The annual cash flows have the following projections. Use Appendix B and AppendixD for an approximate answer but calculate your final answer using the formula and financial calculator methods.Year12345Cash Flow$ 22,00024,00026,00032,00014,000a. If the cost of capital is 11 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.Net present valueb. What is the internal rate of return?Note: Do not round intermediate calculations, Enter your answer as a percent rounded to 2 decimal places.Intemal rate of return%

Net cost of the machine = $57,000Cost of capital = 11%

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 $57,000. 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 1 2 3 5 Cash Flow $ 22,000 24,000 26,000 32,000 14,000 a. If the cost of capital is 11 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. Net present value b. What is the internal rate of return? round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

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 $57,000. 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 1 2 3 5 Cash Flow $ 22,000 24,000 26,000 32,000 14,000 a. If the cost of capital is 11 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. Net present value b. What is the internal rate of return? round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...

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