Kennesaw Corp. is analyzing the purchase of a cost saving equipment. The equipment is expected to reduce energy expenses by $370,000 before tax per year, and it is expected to have a salvage value of $95,000 after four-years. This equipment will be used for four-years and depreciated using the five-year MACRS using the rates in the below table. The equipment will cost $630,000 to purchase and will require an additional $70,000 for installation costs. In analyzing the feasibility of the investment, the CEO ordered a series of tests to determine whether the proposed equipment will realize the required costs savings or not for a total cost of $12,000. The cost of capital for this investment is estimated at 15% and the project is expected to increase net working capital by $55,000 at the beginning of the project. The marginal tax rate for this project is 35%.

Year	1	2	3	4	5	6
MACRS	20.00%	32.00%	19.20%	11.52%	11.52%	5.76%

The after-tax salvage value for this project is:

$99,652

2)

$104,086

3)

$108,663

4)

$120,095