A. X Company is considering producing and selling a new product with a useful life of five years. New equipment costing $1,200,000 will have to be purchased. At the end of five years, the equipment can be sold for $30,000. In each of the first three years, cash flows from this product will be $330,000; in each of the remaining years, cash flows will increase to $350,000. If the discount rate is 4%, the net present value for this new product is

B. X Company bought a machine three years ago for $135,000 but is considering replacing it with a new, more efficient one. The new machine will cost $165,000. Both machines will last for four more years, and both will be worth zero at that time. The current machine can be sold immediately for $15,000. Operating costs with the current machine are $65,500; operating costs with the new machine are $30,500. Using a discount rate of 5%, the net present value of replacing the current machine is