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Delta, Inc

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Essay

Delta, Inc.is considering the investment of $75,000 in a new machine.The machine will generate cash flow of $16,800 per year for each year of its seven-year life and will have a salvage value of $12,000 at the end of its life.Delta Inc.'s cost of capital is 14% 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.


Definitions:

Significance Level

The significance level, often denoted as alpha (α), is the probability of rejecting the null hypothesis when it is actually true, serving as a threshold for determining the statistical significance of an effect.

Degrees of Freedom

The number of values in the final calculation of a statistic that are free to vary.

Dependent Means

Refers to the average outcomes within groups that are related or paired, often used in the analysis of experiments or studies.

Individuals

Refers to distinct objects or entities being studied or observed in research or statistical analysis, often representing people, animals, or units in an experiment or survey.

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