(a)[4]
Find the net cash flows for each year over the machine's life.
(b(i))[4]
Calculate the net present value (NPV) for the proposed purchase.
(b(ii))[4]
Calculate the internal rate of return (IRR) for the proposed purchase.
(c)[3]
Advise the directors on whether the machine ought to be bought. Support your answer.
(d)[3]
Explain what the term sensitivity analysis means for investment appraisal.
(e)[7]
Assess how the director’s suggestion affects the choice to buy the new machine. Justify your answer with calculations.