Lake Torrens Minimarket desires to buy a new coding machine to help control inventories. The machine sells for $73 172 and requires working capital of $8000. Its estimated useful life is five years and will have a salvage value of $8000. Recovery of working capital will be $8000 at the end of its useful life. Annual cash savings from the purchase of the machine will be $20 000.

Required

a) Compute the net present value (NPV) at a 14% required rate of return. 5marks

b) Compute the internal rate of return (IRR). 7marks

c) If you are considering two mutually exclusive projects, and you found conflicting outcome based on the NPV and IRR methods, which result would you accept and why? 3marks