A company is considering a project that will reduce annual operating expenses by $200,000 before income taxes each year for the next five years. The project requires an investment in a big machine that costs $1,000,000 and will be depreciated straight line to zero over a 5-year period. At the end of the project life, the machine can be sold for $500,000. The machine uses a different material and inventory will initially rise by $100,000 and the inventory can be sold at the end of the project for the same amount it cost. The company's marginal tax rate applicable for this project is 40%. The company's required rate of return on the project is 10%.