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Tough Steel, Inc. is a processor of carbon, aluminum, and stainless steel prextucts. The firm is considering replacing an old stainless steel tube- making machine
Tough Steel, Inc. is a processor of carbon, aluminum, and stainless steel prextucts. The firm is considering replacing an old stainless steel tube- making machine for a more cost-effective machine that can meet the firm's quality standards. The old machine has completely depreciated and has no market value. The new can be purchased for $6460,000, but will require $40,000 in installation costs. This machine would be depreciated under the MACRS's 5-year recovery period. The firm has estimated the following net cash flow for the machine The firm's WACC is 4% Net Cash Flow Year 1 2 3 4 5 Net Cash Flow $35,000 $30,000 $8.900 $19.500 $19,000 Calculate the NPV of the investment project Rounded to 2 decimal/Rounded to the nearest 0.01) Calculate the IRR of the investment project (Rounded to 2 decimal/Rounded to the nearest 0.01) Should the firm accept the project
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