Greenway Agricultural is evaluating an irrigation system replacement. The old system, which is still operational, can be sold for $15,000. The new system will cost $220,000 and requires an additional working capital investment of $35,000. It will save the company $55,000 annually in operating costs for the next six years, after which it will have no salvage value. The company’s required rate of return is 7%. Additionally, there are one-time setup costs of $5,000 in the first year. Calculate the NPV of the investment and advise if the company should proceed.

Requirements:

1. Calculate the NPV of the investment.
2. Determine the feasibility of the investment.
3. Include the salvage value of the old system.
4. Consider additional working capital and setup costs.
5. Use a discount rate of 7%.