A machine with a purchase price of £14,000 is estimated to eliminate manual operations costing £4,000 per year. The machine will last 5 years and have no residual value at the end of its life.

You are required to calculate:

(a) the internal rate of return (IRR)

(b) the level of annual saving necessary to achieve a 12 per cent IRR

(c) the net present value if the cost of capital is 10 per cent.