The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $45,000. The annual cash flows have the following projections: (15 points)

Year Cash Flow

1 .................... $15,000

2 .................... $20,000

3 .................... $25,000

4 .................... $10,000

5 ....................$ 5,000

a. If the cost of capital is 10 percent, what is the net present value of selecting a new machine?

b. What is the internal rate of return?

c. Should the project be accepted? Why?