Chapple and Company are considering investing in a project to streamline their production process. The cash flows are shown below. The required rate of return for projects of this class is 8%.

Time 0 1 2 3 4 5 6

Cash flow -200,000 55,000 65,000 10,000 35,000 25,000 10,000

Use only the NPV decision rule to evaluate this project.

Should the project be accepted or rejected? Calculate the NPV.

Given the information in question 11 above, Chapple and Company now estimates that the cash flow in year 1 will be 150,000 instead of 200,000.

Calculate the IRR. Based on the IRR calculation should the project be accepted or rejected.