Question & Answer: South Bay Manufacturing Ltd. is considering the investment of $230,000 in a new machine. The machine will generate cash flow of $4…..

South Bay Manufacturing Ltd. is considering the investment of $230,000 in a new machine. The machine will generate cash flow of $40,000 per year for each year of its eight-year life and will have a salvage value of $26,000 at the end of its life. The company’s cost of capital is 10%. What is the calculated net present value of the proposed investment. (Ignore income taxes.) What will the internal rate of return on this investment be relative to the cost of capital? Explain / discuss your answers. What useful information does this process provide for decision making related to this capital investment? (Note: you may use the tables at the end of chapter six or else calculate using Excel or a financial calculator.)