Baxwell tire company is thinking about buying a new machine that will increase the speed of manufacturing and save money. The net cost of the machine is $66,000. The annual cash flows are projected as follows:
Year Cash Flow
1 $21,000
2 $ 29,000
3 $ 36,000
4 $ 16,000
5 $ 8,000
A. If the cost of capital is 10%, what is the net present value?
B. What is the internal rate return?
C. Should the project be accepted? Why?