Emerald Ltd is considering a new machine which will reduce net cash inflow by $38000 in the current year, but increase net cash inflow by $9000, $14000, $18000, $22000, $26000 and $26000 in the following six years.

Required
(a) If Emerald’s cost of capital is 10 per cent, what is the NPV for the machine?
(b) If Emerald’s cost of capital is 20 per cent, what is the NPV for the machine?
(c) Advise management on the purchase of the machine.