Exercise 1 A machine costs 4 000 and has a residual value of 0. Management uses a cost of capital of 9%. Part A Assume that the machine will generate cash flows of 1500, 1600 and 2000 over the next three years. a) What is the net present value of investing in the machine? b) What is the payback time? c) Estimate the IRR Part B: Assume that the machine generates an average EBITDA (profit before interests, taxes, depreciation, and amortization) of 1600 per year (for three years). d) What is the average yearly profit (profit comparison method)? e) What is the payback time (based on average EBITDA)