University work

Finance tutorial

Could you solve the question. I will give good feedback if it is well and completely answered. Failure to do so will result in negative feedback. Thanks!

X plans to buy a new machine. The cost of the machine, payable immediately, is $800,000 and the machine has an expected life of five years. Additional investment in working capital of $90,000 will be required at the start of the first year of operation. At the end of five years, the machine will be sold for scrap, with the scrap value expected to be 5% of the initial purchase cost of the machine. The machine will not be replaced.

Production and sales from the new machine are expected to be 100,000 units per year. Each unit can be sold for $16 per unit and will incur variable costs of $11 per unit. Incremental fixed costs arising from the operation of the machine will be $160,000 per year. The production and sales are expected to increase by 2.5% per annum. It is also expected that selling price inflation will be 4.2% per year, variable cost inflation will be 5% per year and fixed cost inflation will be 3% per year

X has an aftertax cost of capital of 11% which it uses as a discount rate in investment appraisal. The company pays profit tax one year in arrears at an annual rate of 30% per year. Taxallowable depreciation should be ignored.

Calculate Internal rate of return and Net Present Value.