You are in charge of evaluating a 5-year project. The project involves the purchase of a machine that has a price tag of $450,000 at time zero. In addition, the firm will have to spend to increase NWC by $75,000 at time zero. The project, utilizing the machine, will produce expected revenues of $300,000 for the first year, and this is expected to increase to $400,000 during the second year. Sales are projected to be $500,000 during each of the final three years of the project. At the end of the five-year run of the project, it is expected you can sell the machine for $100,000 each.

Throughout, COGS are expected to be 45% of sales and the tax rate is 21%. The machine can be depreciated as a MACRS three-year property class, while the increase in NWC cannot be depreciated. You can recover 65% of the change in net working capital at the end of the project. Finally, the project has a required return of 8.5%.

What is the Net Present Value of the project?

What is the Discounted Payback Period of the Project?