NPV/IRR Class Problems Mauser Company is trying to reduce its cost structure in an effort to boost profits It is looking at automating parts of its production process. It is evaluating two different pieces of equipment to accomplish the cost reductions Equip A Cash Flows Year 2 Toda Year 1 Year 3 Year 4 Cost of equipment Shipping & handling Start - up expenses Total Investment $ (100,000) S(5,000) S(15,000) $ (120,000) Labor savings (after tax) Salvage value (after tax) Total Savings $15,000$40,000 $ 50,000 $50,000 $5,000 $15,000$40,000 $ 50,000 $55,000 WACC 9% NPV IRR Payback