The Green Goddess Company is considering the purchase of a new machine that would increase the speed of manufacturing tires and save money. The net cost of the new machine is $45,000. The annual cash flows have the following projections.
Year ................Cash flow
1 .......................$15,000
2 .........................20,000
3 .........................25,000
4 .........................10,000
5 ...........................5,000
a. If the cost of capital is 10 percent, what is the NPV?
b. What is the IRR?
c. Should the project be accepted? Why?