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    NPV and IRR Calculations: Axel Corporation

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    Axel Corporation is planning to buy a new machine with the expectation that this investment should earn a rate of return of at least 15%. This machine, which costs $150,000, would yield an estimated net cash flow of $30,000 a year for 10 years.

    A. What is the net present value for this proposal?
    B. What is the internal rate of return for this proposal?

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    Solution Summary

    The solution computes NPV & IRR for Axel Corporation.