A firm purchased a machine for $300,000 at the end of Year 0 which generated revenue of $24,000 at the end of each month and incurred operating expenses of $11,000 at the end of each month of use. The machine was used for 4 years and sold at the end of Year 4 for $55,000. The firm wanted to find out how profitable the use of the machine has been.
a. Calculate the Present Worth of the project using a hurdle rate of 12 percent a year compounded monthly.
b. Calculate the rate of return earned on this project as an Annual Percentage Rate (APR).