XYZ Ltd. is evaluating a new machine purchase:

• Machine cost: $300,000
• Useful life: 7 years
• Annual operating savings: $70,000
• Depreciation: Straight-line method
• Salvage value: $30,000
• Discount rate: 8%

Required:

1. Calculate the annual depreciation expense.
2. Compute the net present value (NPV) of the machine.
3. Determine the internal rate of return (IRR).
4. Calculate the payback period.
5. Advise if the machine should be purchased based on the NPV and IRR.