ABC is considering the purchase of a $3,000 souffle maker, which has a life of 2 years and will be depreciated to a final book value of $1,000 by the straight-line method. The machine will produce 1,000 souffles per year, with each costing $2 to make and priced at $4. In order for the machine to work, an increase in net working capital of $1000 is required at the beginning and it will be fully recovered at the end of year 2. The used souffle maker can be expected to sell at $2000 two years later. Assume that the discount rate is 8%, the firm is profitable, and the tax rate is 40%.

6. The project produces the following cash flow in the first year in its life:
7. The NPV of the project is: