Macy Co. is considering the investment of $86,000 in a new machine. The machine will generate cash flow of $18,500 per year for each year of its six-year life and will have a salvage value of $5,000 at the end of its life. Macy Co.'s cost of capital is 10 percent.
(a.) Calculate the net present value of the proposed investment. Ignore income taxes, and round all answers to the nearest $1.
(b.) What will the internal rate of return on this investment be relative to the cost of capital? Explain your answer.

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The Answer of Macy Co. is considering the investment of $86,000 in a new machine. The machine will generate cash flow of $18,500 per year for each year of its six-year life and will have a salvage value of $5,000 at the end of its life. Macy Co.'s cost of capital is 10 percent.
(a.) Calculate the net present value of the proposed investment. Ignore income taxes, and round all answers to the nearest $1.
(b.) What will the internal rate of return on this investment be relative to the cost of capital? Explain your answer.

Macy Co Is Considering the Investment of $86,000 in a New