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In: Finance

Big​ Steve's, a maker of swizzle​ sticks, is considering the purchase of a new plastic stamping...

Big​ Steve's, a maker of swizzle​ sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of ​$ 110,000 and will generate free cash inflows of $ 19,000per year for 13 years. a. If the required rate of return is 8 ​percent, what is the​ project's NPV​? b. If the required rate of return is 18 ​percent, what is the​ project's NPV​? c. Would the project be accepted under part ​(a​) or ​(b​)? d. What is the​ project's IRR​?

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Expert Solution

Calculate the NPV and IRR as follows:

Formulas:


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