1. Alexa Industries is considering entering the cloud computing business running software specifically for storage unit management. The necessary hardware and software for the project is estimated to cost $2,000,000 with an additional $500,000 for installation and configuration. $100,000 in additional working capital would also be required. Management anticipates added revenues of $1,200,000 per year and expenses of $300,000 per year for the duration of the five year project. The equipment and software would be depreciated straight-line over its five year life and would have an estimated salvage value of $200,000 at the end of five years. Given the firm's tax rate of 25% and required rate of return of 11%, what is the project's NPV?

2. Joe "The Hacker" Smith is a very sophisticated drug dealer. He has a front company that has a cash scanning machine that is in good condition, but a new model has come out that user laser scanning technology to do a better job of finding counterfeit bills. The old machine has an estimated remaining life of 5 years and depreciation of $10,000 per year. It could currently be sold for $60,000, but it will have a zero estimated salvage value in another five years. The new machine will cost $125,000 and although it will not change revenues, it is expected to save the "company" $35,000 per year in costs from counterfeit bills. The new machine will be depreciated straight line over 5 years and isn't expected to be worth anything at the end of 5 years. The firm's tax rate is 25% and their required rate of return on this low-risk project is 10%. What is the IRR of the project?