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Q: Calculation the NPV assuming a discount factor of 8% and of the IRR ( No Answer,   0 Comments )
Question  
Subject: Calculation the NPV assuming a discount factor of 8% and of the IRR
Category: Business and Money
Asked by: irfanrashid-ga
List Price: $2.00
Posted: 15 Mar 2005 08:09 PST
Expires: 14 Apr 2005 09:09 PDT
Question ID: 495031
1.	The new machine will have a 11-year life (counting 0 to 1 as the first year)..
2.	The new machine should save on annual labour costs.  In the first
year it will save £15000 and this figure will increase by £1000 on a
year-by-year basis.
3.	It will also save on operating supplies: £500pa for the first four
years, £600 pa for next four years and £700 pa for the last three
years.
4.	A small maintenance saving of £100 pa will be realised for each of
the years except the first.
5.	An initial installation cost of £4000 will be charged in the first year.
6.	The machine will cost £140,000.
7.	A starting inventory cost of £200 will also have to be made.

The company CEO does not like spreadsheets as he wants to see all the
working.  However, the CEO needs:

1.	A calculation the net present value (NPV) assuming a discount factor of 8%.
2.	A calculation of the IRR ? using discounting tables.
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