The SBX Construction Company is considering an investment of $50,000 for a horizontal boring machine. There is no increase in working capital requirements and no tax credits. Depreciation is straight line and the salvage value is zero. The tax rate is 40 percent and the required IRR is 15 percent. Cash operating costs are $10,000 a year. Cash operating revenues are $30,000 per year. The estimated life of the boring machine is five years.

a. Determine the EATCF stream,

b. Determine NPV at 10 percent for the equipment investment.

c. Determine the IRR for the investment.

d. Is the boring machine a desirable investment? Explain your answer in a memo to the project manager.