A company is considering replacing one of the old machines used in the manufacturing process. The machine was purchased 2 years ago for $600,000. This machine is being depreciated on a straight-line basis, and it has 4 years of remaining life. When this machine was purchased 2 years ago, it was assumed to have zero salvage value at the end of its useful life of 6 years. Currently, this machine has a market value of $250,000. The company intends to keep this old machine as spare if the replacement happens. The current revenue generated by this machine is $250,000 annually and the cost of operating the machine is $175,000 annually.

The replacement machine will cost of $750,000 and $50,000 for shipping and transportation to the companys location. The new machine falls into 3-year MACRS (33%, 45%, 15% and 7%). The replacement machine would permit an output expansion, so sales will become $450,000 per year. Even so, the new machine's greater efficiency would cause operating expenses to become $95,000 per year. The new machine would require inventories be increased by $65,000, but accounts payable would simultaneously increase by $10,000. The replacement project life is 4 years. The new machine can be sold at the end of the projects life for $50,000 while the old machine will not have any value at the end of the 4^th year. The companys marginal federal-plus-state tax rate is 40%, and its cost of capital is 12%.

What is the non-operating cash flow for year 4?

		95,000
		65,000
		75,000
		85,000
		105,000

What is the NPV of the project?

		-464,717.56
		-408,385.19
		-618,274.36
		-376,183.88
		-297,185.48