Cost of equipment = $400,000.
Shipping & installation will be $20,000.
$25,000 in net working capital required at setup.
3-year project life, 5-year class life.
Simplified straight line depreciation.
Revenues will increase by $220,000 per year.
Defects costs will fall by $10,000 per year.
Operating costs will rise by $30,000 per year.
Salvage value after year 3 is $200,000.
Cost of capital = 12%, marginal tax rate = 34%.