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    Capital Budgeting- NPV, IRR

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    14. The Pan American Bottling Co. 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 $45,000. The annual cash flows have the following projections:
    Year Cash Flow
    1 . . . . . . . . . . $15,000
    2 . . . . . . . . . . 20,000
    3 . . . . . . . . . . 25,000
    4 . . . . . . . . . . 10,000
    5 . . . . . . . . . . 5,000
    a. If the cost of capital is 10 percent, what is the net present value of selecting a new machine?
    b. What is the internal rate of return?
    c. Should the project be accepted? Why?

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    https://brainmass.com/business/capital-budgeting/capital-budgeting-npv-irr-19432

    Solution Summary

    The solution makes a recommendation in a capital budgeting problem based on NPV, IRR criteria.

    $2.19

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