XYZ CORP. CAPITAL BUDGET XYZ wants to buy a new production machine for $20,000. Projected cash flows (already adjusted) from this investment will be $5,000; 4,000; 6,000; 6,000; and 6,000. The residual value of the machine is $500, and the company will receive the IRS ITC for buying the new capital equipment. The machine will require some maintenance in year 2 for $1,000, and the company can borrow from its bank at Prime plus 5 . Is this a good investment? Regardless of your answer to this question, what is the IRR of this project? is considering a new investment that will cost $50,000 to produce a new product that the president of the company has invented. The marketing dept. of the company anticipates that new cash flows from the investment will be $10,000, 12,000, 12,000, 12,000, and 10,000. The newly elected President of the United States, President H. Cliaton, has reinstituted the old investment tax incentive for corporations which gives an investment tax credit of 10% of the cost of an investment applicable in the second year after implementation of the investment. It will cost the company $2,000 to install the new equipment in the factory to get it going. The operations officer/engineer (Ms. Dolly Pardon) thinks that the residual value of the equipment will be $Lo,oco that maintenance costs will be $1,000 in years 2 and 4 only. The corporate controller says that the accounting dept. has been using DD8 depreciation for all new equipment. Assuming the company can sell bonds at 10% to pay for this investment, is this a good investment for the company? Whether it is or is not, the president of the company, Andrusco (that inconsiderate you-know- what) wants to know what the IRR is of the new investment