Supreme Standard is considering a new machine which will reduce net cash inflow by $20000 in the…

Supreme Standard is considering a new machine which will reduce net cash inflow by $20000 in the current year, but increase net cash inflow by $4000, $6000, $8000, $10000, $12000 and $14000 in the following six years. a. If the entity’s cost of capital is 10 per cent, should it buy the machine? b. If the entity’s cost of capital is 20 per cent, should it buy the machine? c. What is the IRR for the machine? d. Advice management on the purchase of the machine? View Solution:
Supreme Standard is considering a new machine which will reduce

 

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