(NPV with varying required rates of return?) Big? Steve's, a maker of swizzle? sticks, is considering...

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(NPV with varying required rates of return?) Big? Steve's, amaker of swizzle? sticks, is considering the purchase of a newplastic stamping machine. This investment requires an initialoutlay of ?$100,000 and will generate free cash inflows of $18,000per year for 15 years.
a. If the required rate of return is 5 ?percent, what is the?project's NPV??
b. If the required rate of return is 20 percent, what is the?project's NPV??
c. Would the project be accepted under part ?(a?) or ?(b?)?
d. What is the? project's IRR??

Answer & Explanation Solved by verified expert

4.4 Ratings (900 Votes)

aNet present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 100000 Cash flow for all the years should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow press the NPV button and enter the required See Answer

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(NPV with varying required rates of return?) Big? Steve's, amaker of swizzle? sticks, is considering the purchase of a newplastic stamping machine. This investment requires an initialoutlay of ?$100,000 and will generate free cash inflows of $18,000per year for 15 years.a. If the required rate of return is 5 ?percent, what is the?project's NPV??b. If the required rate of return is 20 percent, what is the?project's NPV??c. Would the project be accepted under part ?(a?) or ?(b?)?d. What is the? project's IRR??