Solution-Compute internal rate of return and profitability

Compute internal rate of return and profitability index

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Reference no: EM131704769

Question - Diamond Company is considering purchasing a machine that would cost $756,000 and have a useful life of 8 years. The machine would reduce cash operating costs by $132,632 per year. The machine would have a salvage value of $151,200 at the end of the project.

Compute:

a. Net present value

b. Internal rate of return

c. Profitability index

d. Payback period

e. Simple rate of return

f. Should the company purchase the machine? Why or why not?

Reference no: EM131704769

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Compute internal rate of return and profitability index

Reference no: EM131704769

Reference no: EM131704769

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