4. A machine can be purchased for an initial cost of 5,000 payable at the beginning of the project. The revenues and maintenance costs arising from purchasing the machine are projected as follows: All revenues and maintenance costs are assumed to occur at the end of each corresponding year. At the end of year 6 , it is predicted that the machine can be sold for 1,000. (a) Assuming that the rate of interest on borrowing and lending is 10% per annum effective, calculate the net present value (NPV) of the project of purchasing the machine. (b) Find, to the nearest 0.1%, the IRR of the project of purchasing the machine by using linear interpolation with net present values and interest rates given in the table below: [5 marks] [5 marks] (c) Suppose that the investor also has an option to hire the same machine for six years from a hiring company. The annual hiring cost of the machine is 1,000 payable at the beginning of each year for six years only, while all the maintenance costs will be covered by the hiring company. The machine will be returned to the hiring company at the end of six years. The revenues arising from hiring the machine will be the same as purchasing the machine and will be received at the end of each year. Assuming that the interest rate remains at 10% per annum effective, calculate the net present value of the project of hiring the machine. [5 marks] (d) Instead of purchasing the machine, the investor decides to hire it from the hiring company. Discuss three advuntages of hiring the machine to support the investor's decision. [3 marks] [Total: 18 marks]