Madison Manufacturing is considering a new machine that costs $350,000 and would reduce pre-tax manufacturing costs by $110,000 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $33,000 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. Working capital would increase by $35,000 initially, but it would be recovered at the end of the projects 5-year life. Madisons mar-ginal tax rate is 25%, and a 10% cost of capital is appropriate for the project.

B. Assume management is unsure about the $110,000 cost savingsthis figure could deviate by as much as plus or minus 20%. What would the NPV be under each of these extremes? THE ANSWER IS $100, 209; -$24,887 (PLEASE SHOW ME THE STEPS AND LABEL THE ANSWER)