Jefferson Products, Inc., is considering purchasing a new automatic press brake, which costs $320,000 including installation and shipping. The machine is expected to generate net cash inflows of $87,000 per year for 10 years. At the end of 10 years, the book value if the machine will be $0, and it is anticipated that the machine will be sold for $128,000. If the press brake project is undertaken, Jefferson will have to increase its net working capital by 70,000. When the project is terminated in 10 years, there no longer will be a need for this incremental working capital, and it can be liquidated and made available to Jefferson for other uses. Jefferson requires a 12 percent annual return on this type of project and its marginal tax rate is 40 percent.

a.Calculate the press brake's net present value.

b.Is the project acceptable?

c.What is the project's internal rate of return?