A company is planning to purchase a machine to meet the increased demand for its products in the market. The machine costs `50,000 and has no salvage value. The expected life of the machine is 5...

A company is planning to purchase a machine to meet the increased demand for its products in the market. The machine costs `50,000 and has no salvage value. The expected life of the machine is 5 years, and the company employs straight-line method of depreciation for tax purposes. The estimated earnings after taxes are `5,000 each year for 5 years. The after-tax required rate of return of the company is 12 per cent. Determine the IRR. Also, find the payback period and obtain the IRR from it. How do you compare this IRR with the one directly estimated? What are the reasons for the differences between the two IRRs so estimated?