In: Finance
Biotech company is considering buying a machine. The cashflows at the beginning of the year for each machine are shown in the following table. Assume a rate of return of 12%. Find the IRR and NPV of each machine. Which machine should Biotech buy? Do the machines have a unique IRR? Justify your answers.
Time |
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Machine 1 |
-150 |
20 |
130 |
50 |
26 |
Machine 2 |
-90 |
-90 |
200 |
36 |
36 |