The Long-line Machine Company is evaluating a capital expenditure proposal thatrequires an initial investment of $50,000 and has predicted cash inflows of $8,000 peryear for 10 years. It will have no salvage value.Present value factor of an annuity n= 10, I=(%16) 4.833Present value factor of an annuity n= 10, I=(%26) 3.465Required:a. Using a required rate of return of 16%, determine the net present value of theinvestment proposal.b.Determine the proposal's internal rate of return.c. What is the Payback period?d. What would you advice Long-line company?

The Net Present Value (NPV) is calculated by subtracting the initial investment from the present…

Answered: The Long-line Machine Company is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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