XYZ Ltd plans to invest in a new machine costing $8,000, expected to generate cash inflows of $2,500 annually for four years Requirements Calculate the NPV using a discount rate of 14 Compute the IRR Should the project be accepted based on NPV and IRR Determine the Payback Period Evaluate the effect on NPV if the discount rate increases to 16

Question: XYZ Ltd. plans to invest in a new machine costing $8,000, expected to generate cash inflows of $2,500 annually for four years. Requirements: Calculate the

XYZ Ltd. plans to invest in a new machine costing $8,000, expected to generate cash inflows of $2,500 annually for four years.

Requirements:

Calculate the NPV using a discount rate of 14%.
Compute the IRR.
Should the project be accepted based on NPV and IRR?
Determine the Payback Period.
Evaluate the effect on NPV if the discount rate increases to 16%.

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