LMN Company plans to purchase new machinery for $600,000. The machinery has an expected useful life of 8 years and a salvage value of $50,000. The machinery will generate additional annual revenues of $150,000, with annual operating costs of $30,000. The company's cost of capital is 8%.

• Requirements:
  • Calculate the annual depreciation expense using the straight-line method.
  • Determine the annual net cash flows from the investment.
  • Calculate the Net Present Value (NPV) and the Internal Rate of Return (IRR).
  • Advise on whether LMN Company should purchase the machinery.