25. A fabrication shop in New York is purchasing a new rivet machine to replace an existing one. The new machine costs $8,000 and will require an additional cost of $1,000 for modification. It will be depreciated using simplified straight-line depreciation over five years. The new machine operates much faster than the old machine and with better quality. Consequently, sales are expected to increase by $2,100 per year for the next five years. While it is faster, it is fully automated and will result in increased electricity costs for the firm by $700 per year. It will, however, save about $850 per year in labor costs. The old machine is 20 years old and has already been fully depreciated. It i the firm's marginal tax rate is 28%, compute the after-tax incremental cash flows for the new machine for years 1 through 5.

A $2,698

B. $2,124

C. $1,620

D. $450

26. Cupcake Enterprise's owner Syed wants to purchase a new machine, which will cost $220,000, plus an additional $8,500 to ship and install. The new machine will have a 5-year useful ife and will be depreciated to zero using the straight-line method. With the new machine, Inventory will increase by $14,000 and Payables will increase by $5,000. The working capital will recover at terminal year. The machine is expected to generate new sales of $40,000 per year and is expected to save $20,000 in labor and electrical expenses over the next 5-years. The machine is expected to have a disposal value of $35,000. Cupcake Enterprise uses a 8% discount rate for capital budgeting purposes and the firm's income tax rate is 28%. What is the machine's NPV?

A. $17,210

B. $23.936

C. $67,404

D. $142,442