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2. You purchase a new machine for your firm. It costs $84,000 and will expand your cash flow by $13,500/year in year 1 growing by 2.5% per year after that. The system will work for 30 years before you have to replace it. What are the NPV (at a 5.5% discount rate) and IRR? The vendor offers you another machine costing $99,000 and lasting 35 years, with the same yearly cash flow and growth rate. What are the NPV and the IRR for it? Should you get it? x D E F G H B Machine 1 5.5% 2.5% 363,873 Machine 2 5.5% 2.5% Place text answer in the box below: C16 A 1 2 Discount rate 3 Growth rate 4 NPV SIRR 6 Cash flows: 7 Start 8 Year! 9 Year 2 10 Year 3 11 Year 4 12 Years 13 Year 6 14 Year 7 15 Year 8 16 Year 9 17 Year 10 18 Year 11 19 Year 12 20 Year 13 21 Year 14 22 Year 15 23 Year 16 24 Year 17 25 Year 18 26 Year 19 27 Year 20 28 Year 21 29 Year 22 30 Year 23 31 Year 24 32 Year 25 33 Year 26 34 Year 27 35 Year 28 36 Year 29 37 Year 30 38 Year 31 39 Year 32 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11.497 10,897 12,796 12,129 11,497 10,897 12,796 12.129 11,497 Prob. 1 Prob. 2 Prob. 3 Prob. 4 Prob. 5 V. AUG 2021 14 Year 7 15 Year 8 16 Year 9 17 Year 10 18 Year 11 19 Year 12 20 Year 13 21 Year 14 22 Year 15 23 Year 16 24 Year 17 25 Year 18 26 Year 19 27 Year 20 28 Year 21 29 Year 22 30 Year 23 31 Year 24 32 Year 25 33 Year 26 34 Year 27 35 Year 28 36 Year 29 37 Year 30 38 Year 31 39 Year 32 40 Year 33 41 Year 34 42 Year 35 43 44 45 46 47 48 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11,497 10,897 12,796 12,129 11.497

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