Grouper Doggy Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $250,000. In addition, Austin estimates that the new machine will increase the company's annual net cash flows by $38,500. The machine will have a 12-year useful life and no salvage value.

Calculate the following:

a.) Cash payback period

b.) Net present value using a discount rate of 10%