Nashville Inc is contemplating the purchase of a machine capable of performing some operations that are now performed manually. The machine will cost $90,000 and last for five years. At the end of the five year period, the machine will have a zero scrap value. Use of the machine will reduce labor costs by $25,000 per year (cash basis). The company's required rate of return (discount rate) is 12% on all investments projects. The company's tax rate is 20%. The company considers taxes when evaluating capital projects. What is the amount of annual cash flows the company would use in a NPV calculation to evaluate the project?

$28,600

$20,000

None of the other answer choices are correct.

$43,000

$25,000

$23,600