Canada Sports Inc. is expanding its hockey stick production. Currently they produce goalie sticks made out of wood only. They want to expand in to new sticks which are 100 percent composite with foam injected in the shaft and blade. The advantage of the new sticks is that they are extremely light and have good shock absorption.

To produce the new sticks Canada Sports Inc. needs to purchase specialized machinery to inject the foam into the new sticks. After discussions with a Finnish producer of goalie sticks, Canada Sports Inc. is looking at one of two possible machines - a high speed and a low speed injection process. Each machine is expected to last for 10 years after which Canada Sports Inc. will replace the machine with the same model.

Canada Sports Inc. has collected the following information on both machines:

The after tax, initial investment for the high speed machine is $40,000, and for the low speed machine is $15,000

At an interest rate of zero, the sum of the positive cash inflows for the high speed machine is $75,000.

At an interest rate of zero, the sum of the positive cash inflows for the low speed machine is $26,000

The IRR for the high speed machine is 10.61%, and the IRR for the low speed machine is 13.50%

At an interest rate of 9.587%, the NPV for both projects is $22,537.

Questions:

Over what range of costs of capital should Canada Sports Inc. choose the high speed machine?

Over what range of costs of capital should Canada Sports Inc. choose the low speed machine?

Over what range of costs of capital should Canada Sports Inc. not invest in either project?