Kingston Corp

question 143

Essay

Kingston Corp.is considering a new machine that requires an initial investment of $480,000 installed,and has a useful life of 8 years.The expected annual after-tax cash flows for the machine are $89,000 for each of the 8 years and nothing thereafter.
a.Calculate the net present value of the machine if the required rate of return is 11 percent.
b.Calculate the IRR of this project.
c.Should Kingston accept the project (assume that it is independent and not subject to any capital rationing constraint)? Explain your answer.

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Definitions:

Cognitive Development

The process of growth and change in intellectual capabilities that occur from infancy through independent adulthood, encompassing processes such as learning, memory, problem-solving, and decision-making.

Concrete Operations

A stage in Piaget's theory of cognitive development, occurring between ages 7 and 11, where children gain a better understanding of mental operations and can think logically about concrete events.

Stimulus

Any external or internal event or factor that influences or triggers a reaction in a biological organism.

Cognitive Development

The process of growth and change in intellectual/mental abilities such as thinking, reasoning, and understanding over the course of a person's life.