CamKes Ltd. company wants to buy a diamond-tipped automatic glass cutting machine worth 250000 TL. It will be able to pay only 50% of the cost of the machine with its equity capital. For the remaining 50%, he has to take a loan from the bank with an interest rate of % 12 and repay this loan in equal installments over five years. The economic life of the cutting machine is 10 years and its scrap value is estimated to be 50000 TL. The operating and maintenance cost of the machine is (24 x 1000 ) TL per year. If this machine is purchased, the company will earn (24 x 1500) TL/year more income. The expectation of the firm from this investment is to earn 12% (ie 12% interest rate for analysis).

a) What is the NPV of the cutting machine investment?

b) Is this investment suitable? Why?