Fred F. Stone wants to increase the production rate in the Pebble Tech manufacturing plant by adding a new machine. Calculate the NPV for the following capital budgeting proposal: $200,000 initial cost, to be depreciated straight-line over five years to an expected salvage value of $10,000. Resale value of the machine is expected to be $11,000. It has a 35% tax rate, $85,000 additional annual revenues, $33,000 additional annual expense, and $10,000 additional investment in working capital. What would be the projected cash flow for year 5? What would be the projected cash flow for year 0?

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