A small industrial machine costs $100 000 and is expected to earn annual net cash inflows of

$44 000, $40 000, $36 000 and $32 000, before it wears out sufficiently to be unreliable and must be sold for an estimated $10 000.

Required:-

Calculate for the following scenarios:-

(a) If funds earn 10 per cent, what is its NPV?

(b) If funds earn 6 per cent, what is its NPV?

(c) Advise management on the purchase of the machine.