Your company is planning to invest in new equipment that will cost $180,000 and is expected to provide the following savings over its 7-year life:

1) Suppose that the interest rate is 10%. Calculate NPV and evaluate whether the company should invest in the new equipment.

2) Suppose that the interest rate is 4%. Calculate NPV and evaluate whether the company should invest in the new equipment.

3) What is the internal rate of return (IRR) associated with the new equipment?

Year Savings estimate 1 $58,000 2 $49,000 3 $30,000 4 $28,000 5 $24,000 6 $19,000 7 $12,000