Cobra Golf Co.is considering a proposal to replace an existing casting machine for producing a new line of low quality golf clubs. The machine is expected to have a four-year useful life and will be depreciated according to 3-year MACRS (.25, .38, .37). The machine will cost the company $100,000 plus freight and installation costs of $20,000. The machine will be fully depreciated and will have an ending market value of $30,000. Expanding the product line will increase inventories by $10,000, but costs will decrease by $50,000 per year. Assume a tax rate of 40 percent and a cost of capital of 10 percent.

What are the annual cash flows? And calculate the NPV and IRR.