The Pan American Bottling Co. is considering the purchase of a new machine that

Question

The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of botting and save money. The net cost of this machine is $66,000 The annual cash flows have the blowing pre ections. Us·6psend K0 and AceendxD for an approximate answer but calculate your final ansser us ng the formula and financiai calculsor metodi 26.000 28,000 28,000 33,000 11,000 ·if the coat of capital 12 percent, nat is the net present vaue o, selectng a new machne? Oo not round intermediate caleuations and rend your nna, anser to 2 deem. paasj b. What is the internal fate of return? (Do not round intermediate calcuiations. Enter your answer as a percent rounded to 2 decimal places) Iternal te of returm

Explanation / Answer

Two tables have been creaeted as Cash flow for year 1st as photo not very clear(Confusion between 28,000 and 26000) . If cash flow 28000 use first table and if 26000 use second table

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A B C D Year Initial Investment Cash Flows Total cash flows 1 0 66000 -66000 2 1 28,000 28,000 3 2 28000 28,000 4 3 28000 28,000 5 4 33000 33,000 6 5 11000 11,000 7 Cost of Capital 0.12 a) NPV $28,465.07 NPV(B7,D2:D6) b) IRR 29.47% IRR(D1:D6)

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