8. Wabash Industries, which has a 10% required rate of return, is considering hiring a productivity specialist at an annual salary of $100,000 per year. The specialist demands a 10-year employment contract, claiming that she can save the company $800,000 per year in operating costs.

After a 1-year period, Wabash can evaluate whether this is, in fact, the case, or if she saves the company nothing. Wabash could not fire the specialist, but could choose to employ her in a different position, which they estimate would generate an additional $120,000 in income for the company.

Determine the present value of cash flows if the specialist generates the savings and continues in her position, if she generates the savings and is employed in a different position after 1 year, if she does not generate the savings and continues in her position, and if she does not generate the savings and is employed in a different position after 1 year.