Highland industries is considering the purchase of a new computer system, ZZ, to replace the existing system. The cost of the system is $1.4 million plus $105,000 to install. The old system was purchased 5 years ago and has a book value of $170,000. It can be sold today for $250,000. They will also need an additional $20,000 of working capital when the system is put in place. The new system will save Highland $410,000/year in warehousing costs over the next 4 years. The company's cost of capital is 8% and its tax rate is 21%.

a. What is the initial investment for this project?

b. What is the net present value of the project?

c. What is IRR?

d. If another vendor offers basically the same system, XX, with an initial investment of $1.1 million and $250,000/year of savings for 5 years, which project would you accept? Show your NVP and IRR to decide.