Apple Co. wishes to choose between two different machines that accomplish the same task (the machines are mutually exclusive). A comparison of the cash flows of the two machines shows that the less expensive will be save $1,000 at the time of purchase, but create additional costs of $333 per year over its 5-year life. The cost of capital for Apple Co. is 10%.

Compute the internal rate of return of the incremental cash flows (the difference between the two investments) and determine which machine should be purchased. Make the same decision by computing the NPV.