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:

Low-Level Employees

Employees who work in positions that typically require less skill and are lower paying, often referred to as entry-level positions.

High-Level Employees

Workers who hold senior or upper-management positions within an organization, typically responsible for making strategic decisions.

Participation Problems

Challenges that arise when attempting to involve individuals or groups in decision-making processes or activities.

Absenteeism

The frequent absence from work or other duties without good reason, which can affect productivity and morale within organizations.