you are the financial manager for a pet food supply company that is currently at capacity. While sales have seen a steady increase of between 3-6% over the past several years, the marketing department has released the below industry information. The executive management team is working on strategic planning for the next 2-3 years and needs input from you. WACC 7.5% Tax rate 30%.

Subcontract one of the production lines which would decrease the overtime cost (labor savings) but would also decrease margin by increasing costs. The upfront cost of this 3 year agreement is $90,000.

	Year 1	Year2	Year 3
Labor Savings	$60,000	$80,000	$100,000
Contract cost	$30,000	40,000	50,000
Net CF

What is the NPV$ and IRR?