Griffin Co

question 7

Essay

Griffin Co.is considering the investment of $136,000 in a new machine.The machine will generate cash flow of $22,500 per year for each year of its eight-year life and will have a salvage value of $8,000 at the end of its life.Griffin Co.'s cost of capital is 8 percent.
(a.)Calculate the net present value of the proposed investment.Ignore income taxes, and round all answers to the nearest $1.
(b.)What will the internal rate of return on this investment be relative to the cost of capital? Explain your answer.

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Definitions:

Theory X

A management theory suggesting that employees are inherently lazy and require close supervision and control to be productive.

Work Breaks

Scheduled or unscheduled periods during work hours when employees are allowed to rest, eat, or attend to personal matters.

Theory Y

A management theory suggesting that employees are naturally motivated, responsible, and self-directed, requiring participative management styles for optimal performance.

Worker Behavior

The actions and conduct displayed by employees in the workplace.