The production cost and material cost are also cash outflows of the company which would further reduce the cash inflows. The taxable income is computed after deducting depreciation cost, production cost, and material cost. The tax rate is 30% and after-tax cash flows are deducted. Since depreciation is a non-cash expense, thereby adding it to the after-tax cash flows to determine the total free cash flows of the machine. The present value was calculated at 10% return and NPV came out to be 28,309 and IRR is 12.3%. Since NPV is positive and IRR is greater than required return of 10%, both indicators suggest that it is financially viable