Arroy Snackfoods is considering replacing a five-year-old machine that originally cost $50,000. It was being depreciated using straight-line to an expected salvage value of zero over its original 10-year life and could now be sold for $40,000. The replacement machine would cost $190,000 and have a five-year expected life. It would be depreciated using the straight line 5-year class life. The actual expected salvage value of this machine after five years is $20,000. The new machine is expected to operate much more efficiently, saving $6,000 per year in energy costs. In addition, it will eliminate one salaried position saving another $54,000 annually. The firms marginal tax rate is 35% and the WACC is 7.5%.

a. Set up NPV, IRR, and MIRR of the replacement project.