Please help. ! You purchase a new tool system for detecting metal fatigue in your airplane engines. The cost of the system is $40,000 and will expand your business cash flow by $10,000/year in year 1 and these will grow by 3% per year. The system will work for 5 years before you have to replace it with a new one. What is its NPV (use a 7% discount rate) and IRR?

The vendor offers you an extended warranty costing $40,000 on top of the purchase price of $40,000. This warranty extends the systems life by 5 years. What is the NPV and the IRR of the machine with the extended warranty? Should you get the warranty?