Flag N0PV Corporation is considering buying a cost saving machine. The new machine costs $1 million and will last for 10 years. The new machine will be linearly depreciated over 10 years. Assume that they expect the machine to be worthless after 10 years. If they decide to buy the new machine, they will sell the old machine for $200,000. The current book value of the old machine is $250,000. The old machine has a remaining life of 2 years in which the remaining book value is linearly depreciated. The new machine will result in a cost saving of $130,000 every year before tax. Assume a tax rate of 30%. N0PV uses the company WACC to evaluate the project as it has the same risk as N0PV in general and will be financed with the same mix of equity and debt. The equity beta of N0PV is 1.5. The risk-free rate is 2% and the expected return on the market is 7%. The cost of debt before tax is 4%. The market value of debt to equity is 1. If they decide not to do the project they can use the old machine for another 10 years. If they decide to keep the old machine (and not buy the new one) the old machine will be worthless after 10 years.

Question: What is the present value (after tax) of the annual cost savings?

The answer should be Between 665,033.74 and 665,033.76 but need to see work on how it's done.