Help ABC Corporation decide which of these options should be pursued, Option A: Repair the Machine or Option B: Buy a new Machine. Apply Capital Budgeting and Time Value of Money concepts analyze the problem and present recommendation. Calculate the Internal Rate of Return (IRR) and Net Present Value (NPV) for each option. The company has a Weighted Average Cost of Capital (WACC) of 12%. Calculate NPV at three different discount rates: 12% (the current WACC), 14% and 16%.

ABC Corporation has a machine that requires repairs or should be replaced. ABC has evaluated the two options and calculated the cash flows resulting from each option as follows:

Option A: Repair the Machine

Year- Cash Flow

0 -50,000

1 15,500

2 20,100

3 18,900

4 17,100

5 13,700

Option B: Buy a new Machine

Year

Cash Flow

0 -400,000

1 51,300

2 155,000

3 127,800

4 126,900

5 125,100

A memo explaining the results of analysis and recommendation. The memo should include important results of analysis such as a summary table or graph.