OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $5.0 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $780,000 per year in direct labor costs. The company requires a 12% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)

Note: Use appropriate factor(s) from the tables provided.

1. Compute the proposed investments net present value.
2. Using the answer from part a, is the investments internal rate of return higher or lower than 12%? Hint: It is not necessary to compute IRR to answer this question