A4L estimates that if it invests $150,000 in a new machine it will save $40,000 in annual operating costs. The machine has an estimated life of 6 years and no terminal disposal value. The required rate of return is 11%. Ignore taxes. Assume all cash flows occur at year-end except for initial investment amounts.

REQUIRED: a) Using excel, calculate the Net Present Value (NPV) of the new machine and show all your work. (Do not use PV tables or a financial calculator) (0.5 marks)

b) Calculate the Payback Period for the new machine. (0.5 marks)

c) Calculate the Internal Rate of Return (IRR) for the new machine. (0.5 marks)

d) Calculate the Accounting Rate of Return (ARR) based on the net initial investment assuming straight-line depreciation. (0.5 marks)

e) Other than NPV, Payback, IRR, and ARR what other factors (financial and non-financial) should A4L consider when purchasing the machine? List and explain four. (2 marks