Problem:
Big Stevie's is the maker of swizzle sticks, they are considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $90,000 and will generate net cash inflows of $21,000 a year for 9 years.
Required:
Question 1: What is the projects NPV using a discount rate of 9%? Should project be accepted? Why or why not.
Question 2: What is the projects NPV using a discount rate of 14%? Should project be accepted? Why or why not.
Question 3: What is this projects internal rate of return? Should it be accepted? Why or why not.
Note: Please show how to work it out.