Calculate the npv and irr of this investment

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The Interrax Corporation is analyzing the proposed purchase of a new machine for $2,150,000. The proposed machine has an estimated economic life of six years but will be treated as fiveyear MACRS property for depreciation purposes. The machine will increase the firm's capacity, and it is expected to contribute $858,000 annually to earnings before depreciation and taxes. The firm is in a 34% tax bracket and estimates its cost of capital to be 18%. Calculate the NPV and IRR of this investment using an Excel spreadsheet. Show and label your work. Formulas for NPV and IRR are preprogrammed in Excel.

Reference no: EM131903275

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