Your company is considering a machine (new project) that will cost $2,000 at Time 0 and which and worth nothing after 5 years. To operate the machine, $200 must be invested at Time 0 in inventories; these funds will be recovered when the machine is retired at the end of Year 5. The machine will produce sales revenues of $1000/year for 5 years; variable operating costs (excluding depreciation) will be 50 percent of sales. Operating cash inflows will begin 1 year from today (at Time 1). The machine will have MACRS like depreciation expenses of 20%, 32%, 19%, 12%, 17%,in Years 1-5, respectively. The company has a 40 percent tax rate, enough taxable income from other assets to enable it to get a tax refund from this project if the project's income is negative, and a 11% cost of capital. Inflation is zero. Based on your NPV and IRR calculations, should your company buy the machine?

NPV:_____

IRR:______

Decision : Accept or Reject?