Laverty Clinic plans to purchase a new centrifuge machine for its New York facility. The machine costs $94,000 and is expected to have a useful life of 6 years, with a terminal disposal value of $9,000. Savings in cash operating costs are expected to be $24,900 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of $4,000 needs to be maintained at all times, but this investment is fully recoverable (will be "cashed in") at the end of the useful life. Laverty Clinic's required rate of return is 12%. Ignore income taxes in your analysis. Assume all cash flows occur at year-end except for initial investment amounts. Laverty Clinic uses straight-line depreciation for its machines.

Required

1. Calculate net present value.

2. Calculate internal rate of return.