NPV and IRR for a capital project Fuddle Company plans to acquire several new theod- olites because it believes they can save $3,000 of transit crew time per year. The instruments cost $9,800 and have a useful life of 10 years. Company policy is to give its old instruments to its employees, so salvage value is not relevant. Management likes to evaluate its long-term projects using the net present value method with a 25 percent interest rate, and also the IRR method to find the project's actual yield if the project is acceptable.

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REQUIRED Find the net present value of the project at 25 percent and also the internal rate of return if the project is acceptable.