1. The ABD Company is considering buying a new machine for one of its factories. The machine cost is $100,000 and its expected life span is 8 years. The machine is expected to reduce the production cost by $15,000 annually. The terminal value of the machine is $20,000 but the company believes that it would only manage to sell it for $10,000. If the appropriate discount rate is 15% and the corporate tax is 40%,

a. Calculate the project NPV. (-37088.2)

b. Calculate the project IRR. (3.50%)

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