Question: ABC Inc. has provided the following data concerning a proposed project of buying new machinery: Initial Investment $851,000 Annual cash receipts $423,000 Life of the

ABC Inc. has provided the following data concerning a proposed project of buying new machinery:

Initial Investment $851,000

Annual cash receipts $423,000

Life of the project 7 years

Annual cash expenses $169,000

Salvage value $65,000

The company's tax rate is 20%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 7 years. The company uses a discount rate of 13%. Required: Compute the net present value of the project and the Internal Rate of Return.

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