Northern Manufacturing Ltd. is considering the investment of $83,000 in a new machine. The machine...
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Accounting
Northern Manufacturing Ltd. is considering the investment of $83,000 in a new machine. The machine will generate a cash flow of $13,000 per year for each year of its ten-year life and will have a salvage value of $6,000 at the end of its life. The company's cost of capital is 10%. (Use appropriate factor(s) from tables. Round the PV factors to 4 decimals.) Required:
- Calculate the net present value of the proposed investment. (Ignore income taxes.)
- What will the internal rate of return on this investment be relative to the cost of capital?
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