PV CCATS question IRR and NPV

A Business is looking at new equipment technology.

The cost of new technology is $1,490,000, with a useful life of 6 years.

Current equipment was purchased 2 years ago for $1,500,000 and could be rid of now for $650,000. The current equipment will be completely worn out in 6 years' time, with a salvage value of $0.

The new technology has an expected salvage value of $400,000 in 6 years' time. New equipment would save the company $450,500 per year, after tax. Also the new machines would also require a working capital increase of $75,000, which would be fully recovered at time of salvage.

A CCA rate of 20%

Use the PV CCATS method.

tax rate = 30%

required return = 13.5%.

Calculate the NPV and the IRR. Show the formulas used.