Southern Manufacturing Limited is considering the investment of $82,000 in a new machine. The machine will generate cash flow of $15,000 per year for each year of its nine-year life and will have a salvage value of $9,000 at the end of its life. The company's cost of capital is 10%. Table 6.4 and Table 6.5 Note: Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals. Required: a. Calculate the net present value of the proposed investment. (Ignore income taxes.) b. What will the internal rate of return on this investment be relative to the cost of capital? Complete this question by entering your answers in the tabs below. Required A Required B What will the internal rate of return on this investment be relative to the cost of capital? The internal rate of retum on this project will be < Required A

Southern Manufacturing Limited is considering the investment of $82,000 in a new machine. The machine will generate cash flow of $15,000 per year for each year of its nine-year life and will have a salvage value of $9,000 at the end of its life. The company's cost of capital is 10%. Table 6.4 and Table 6.5 Note: Use appropriate factor(s) from the tables provided. Round the PV factors to 4 decimals. Required: a. Calculate the net present value of the proposed investment. (Ignore income taxes.) b. What will the internal rate of return on this investment be relative to the cost of capital? Complete this question by entering your answers in the tabs below. Required A Required B What will the internal rate of return on this investment be relative to the cost of capital? The internal rate of retum on this project will be < Required A

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Description: Southern Manufacturing Limited is considering the investment of $82,000 in a new machine. The machine will generate cash flow of$15,000 per year for each year of its nine-year life and will have a salvage value of $9,000 at the end of its life. The

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...

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