K:\FIN620VHomework 3XHW310 X + bads/cap%20bud%20sol%20Q1-Q3.pdf 1. ABC Corporation is examining the possibility of purchasing a gizmo forging machine to mechanize its production of gizmos. The gizmo forger would cost $500,000 and provide after-tax cash flows of $80,000 per year for an eight year period, after which the forger will be useless and have zero salvage value. ABC has a cost of capital of 12%. a) Calculate the Net Present Value for this investment. b) Calculate the Internal Rate of Return for this investment. Use linear interpolation. c) Based on your answers from parts a) and b), should ABC purchase the gizmo forger? D1Q1-Q3.pdf