Vino Winery is considering the purchase of a state-of-the-art bottling machine. The new machine will cost $20,790 and will have a useful life of 4 years. The new machine will provide net cash savings of $6000 per year. What is the internal rate of return (IRR) for the new bottling machine?Present Value of $1Periods6%8%10%12%14%30.8400.7940.7510.7120.67540.7920.7350.6830.6360.59250.7470.6810.6210.5670.51960.7050.6300.5640.5070.45670.6650.5830.5130.4520.40080.6270.5400.4670.4040.35190.5920.5000.4240.3610.308100.5580.4630.3860.3220.270Present Value of Annuity of $1Periods6%8%10%12%14%32.6732.5772.4872.4022.32243.4653.3123.1703.0372.91454.2123.9933.7913.6053.43364.9174.6234.3554.1113.88975.5825.2064.8684.5644.28886.2105.7475.3354.9684.63996.8026.2475.7595.3284.946107.3606.7106.1455.6505.216 12% 6% 8% 10%

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Answered: Vino Winery is considering the purchase…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...

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Vino Winery is considering the purchase of a state-of-the-art bottling machine. The new machine will cost $20,790 and will have a useful life of 4 years. The new machine will provide net cash savings of $6000 per year. What is the internal rate of return (IRR) for the new bottling machine?

Present Value of $1

Periods	6%	8%	10%	12%	14%
3	0.840	0.794	0.751	0.712	0.675
4	0.792	0.735	0.683	0.636	0.592
5	0.747	0.681	0.621	0.567	0.519
6	0.705	0.630	0.564	0.507	0.456
7	0.665	0.583	0.513	0.452	0.400
8	0.627	0.540	0.467	0.404	0.351
9	0.592	0.500	0.424	0.361	0.308
10	0.558	0.463	0.386	0.322	0.270

Present Value of Annuity of $1

Periods	6%	8%	10%	12%	14%
3	2.673	2.577	2.487	2.402	2.322
4	3.465	3.312	3.170	3.037	2.914
5	4.212	3.993	3.791	3.605	3.433
6	4.917	4.623	4.355	4.111	3.889
7	5.582	5.206	4.868	4.564	4.288
8	6.210	5.747	5.335	4.968	4.639
9	6.802	6.247	5.759	5.328	4.946
10	7.360	6.710	6.145	5.650	5.216

		12%
		6%
		8%
		10%

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