Holmes Manufacturing is considering a new machine that costs $250,000 and would reduce pre-tax manufacturing costs by $90,000 annually. Holmes would use the 3-year MACRS method to depreciate the...

Holmes Manufacturing is considering a new machine that costs $250,000 and would reduce
pre-tax manufacturing costs by $90,000 annually. Holmes would use the 3-year MACRS
method to depreciate the machine, and management thinks the machine would have a
value of $25,000 at the end of its 5-year operating life. The applicable depreciation rates
are 33%, 45%, 15%, and 7%. Net operating working capital would increase by $25,000
initially, but it would be recovered at the end of the project's 5-year life. Holmes's
marginal tax rate is 40%, and a 13% WACC is appropriate for the project.
a. Calculate the project's NPV. Round your answer to the nearest cent.
b. Calculate the project's IRR. Round your answer to two decimal places.