PART C: (10 marks) Required Calculate the Net Present Value and Internal Rate of Return relative to the purchase of a new widget making machine. Machinecost $3,400,000 Useful life: 7 years For tax purposes a 30 per cent reducing balance depreciation would be used. Maintenance cost per annum: $75,000. Maintenance technician salary per annum: $125,000 Operators salary: $90,000, plus 35 per cent on-costs. Restructuring cost (First year only): $180,000. Employee training costs are projected as follows: First Year??$35,000 Second Year??$25,000 Third Year??$10,000 Increase in working capital required: $60,000. Salvage value: $75,000. Manufacturing cost savings per annum: $1,200,000. Sale of now obsolete equipment over the next two years. o Company cost of capital: 10% o Tax rate: 30%.
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