The company "ABCD" is considering to make a new investment by purchasing a new machine for the production of a new product. For the new machine, "ABCD" must spend 6,000 euros, which will be sold after six years. Each year, the machine has 200 euros operating costs. The beneficial/useful life span of the machine is 6 years and its residual (salvage) value is zero.

YEAR	INCOME THE MACHINE GENERATES (in euros)
1	800
2	1,200
3	1,800
4	2,700
5	3,000
6	1,500
TOTAL	11,000

In addition, the corporate tax rate is 40%. the capital cost factor is 8% and the company applies the straight-line method in calculating depreciation.

Evaluate the investment by using:

a) net present value (NPV) method

b) internal rate of return (IRR) method

Discuss your results.