Problem Three (10 marks):

Tetley Company is considering acquiring a new machine. The machine would cost $120,000 and

it would cost another $30,000 to modify the machine and get it installed and ready for

operations.

The machine falls into class 8 with a 20% CCA rate and it would be sold after 3 years for

$50,000. The machine would require an immediate increase of $8,000 in operating net working

capital. The balance of operating net working capital would remain unchanged during the project

and be recovered after 3 years. The machine would have no effect on revenues, however the

machine is expected to save the company $62,000 per year in before-tax operating costs.

The companys tax rate is 30%. The project has a required rate of return of 12% per year

compounded annually.

What is the NPV of the project?

Please show me how this question was done with FULL excel formulas. The profs answer was $7,468.10. However I don't know how she got to it.