A company is contemplating buying a $300,000 security system. The system is selected after a a group within the company spent $20,000 studying similar security systems last year. The new system will save them $175,000 each year before taxes. Working capital would also be reduced by $75,000 in year 1, and $20,000 in year 2, which are permanent reductions. Three years later, the scrap value of the security system would be $100,000. Regulations require the system be depreciated according to a MACRS 3-year schedule. Assume the firm's discount rate is 10 percent and the tax rate is 30 percent.
What is the NPV and the IRR of this new project?
Potential Recovery Percentages are listed below:

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