Quinn Industries is considering the purchase of a machine that would cost $420,0

Question

Quinn Industries is considering the purchase of a machine that would cost $420,000 and would last for 10 years. At the end of 10 years, the machine would have a salvage value of $97,000. The machine would reduce labor and other costs by $82,000 per year. The company requires a minimum pretax return of 14% on all investment projects. (Ignore income taxes.) 19. Required information Required: Compute the net present value of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to the nearest dollar and use a minus sign for negative numbers. Excel / calculator input: Interest Rate (Rate, I, I/YR) % Nper, N PMT $ PV $ FV $ Net Present Value (NPV) $ Required: Compute the internal rate of return of the project by inputting the variables that are entered into your calculator / Excel. (If a variable is not used in the calculation, input a zero (0). Omit the "$" and "%" signs in your response.) Round your answer to one decimal place and use a minus sign for negative numbers. Excel / calculator input: Interest Rate (Rate, I, I/YR) % Nper, N PMT $ PV $ FV $ Internal Rate of Return (IRR) %

Explanation / Answer

A Net Present value Year Present Value @14% Net cash flow Present Value of Cash flow 1 0.877193 82000 71930 2 0.769468 82000 63096 3 0.674972 82000 55348 4 0.59208 82000 48551 5 0.519369 82000 42588 6 0.455587 82000 37358 7 0.399637 82000 32770 8 0.350559 82000 28746 9 0.307508 82000 25216 10 0.269744 179000 48284 Total 453887 Intial Investment -420000 Net Present Value 33887 B Internal rate of Return If we input return 16%, NPV will be -1687 If we input return 15%, NPV will be 15516 IRR = 15.90%

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.