Warrenton Golf currently produces 200,000 cases of golf balls per year at a variable cost of $9.75. Equipment is available for $500,000 that will reduce variable costs by $2.25 per unit, while increasing cash fixed costs by $200,000. The equipment will have no salvage value at the end of its four-year life. Warrenton faces a 40% income tax rate and a 12% cutoff rate.

-Determine the NPV of the investment

-Determine the change in NPV if the equipment has a $25,000 residual value