IBX Pty Ltd is considering the purchase of a new machine that is expected to save the company $89,000 at the end of each year in reduced wages.

The machine costs $270,000, plus another $14,000 to be installed. It is expected to last for five years after which it can be sold as scrap for $42,000. Operating expenses (such as fuel and maintenance) are $8,000 pa.

a)Determine the annual net cash flows of this investment (ignore the effect of taxes). Enter the information in the following table. Indicate whether cash flows are + or -:

Time 0 1 2 3 4 5

Net Cash Flow _____________ __________ ___________ ________ __________ _________________

b)Calculate the NPV if the required rate of return is 15% pa. Give your answer in dollars and cents to the nearest cent. NPV15% = $_________

c)Calculate the NPV if the required rate of return is 17% pa. Give your answer in dollars and cents to the nearest cent. NPV17% = $__________