PT Ltd. is a manufacturer of plastic products. Company is considering computerizing the company’s ordering, inventory and billing procedures. The annual savings from computerization include a reduction of 4 clerical employees with annual salaries of $ 50,000 each. $ 30,000 from reduced production delays caused by raw materials inventory problems. $ 25,000 from lost sales due to inventory stock-outs and $ 18,000 associated with timely billing procedures. The purchase price of the system is $ 2,50,000 and installation costs are $ 50,000. These outlays will be capitalized (depreciated) on SLM basis to a zero salvage value, which is also its market value at the end of 5 years. New system requires two computer specialists with annual salaries of $ 80,000 per person. Also annual operating (cash) expenses of $ 22,000 are estimated to be required. Tax rate is 40% and cost of capital is 12%. Calculate cash flow after tax likely to be generated per year by this project.
(A) $ 76,800
(B) $ 78,600
(C) $ 75,700
(D)$ 77,500