Kelly has asked her accountant, Darla, to determine whether her company, Gaggin Industries, a leader in chain manufacturing, should purchase a new machine for

$155,000 that can be sold at the end of 5 years for $125,000 and during that time will generate cash flows as follows: Year 1) + 4,000; Year 2) +7,000 and Years 3 - 5) +

$15,000. She told Darla to determine her NPV with her cost of capital at 11.5%. With her NPV calculated, what will Darla tell her?

a. Do not purchase the machine because NPV is negative.

b. Purchase the machine because NPV is negative.

c. Do not purchase the machine because NPV is positive.

d. Purchase the machine because NPV is positive.