Big Steve’s, makers of swizzle sticks, is considering thepurchase of a new plastic stamping machine. This investmentrequires an initial outlay of $90,000 and will generate net cashinflows of $19,000 per year for 8 years.
a. What is the project’s NPV using a discount rate of 11percent? Should the project be accepted? Why or why not?
b. What is the project’s NPV using a discount rate of 17percent? Should the project be accepted? Why or why not?
c. What is this project’s internal rate of return? Should theproject be accepted? Why or why not?
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