QUESTION $13$

Thipp industries is considering buying a new recycling system. The new recycling system would be purchased today for $$7,840\mathrm{.}00.$ It would be depreciated straight$-$line to $$1,010\mathrm{.}00$ over $2$ years. In $2$ years, the recycling system would be sold and the after$-$tax cash flow from capital spending in year $2$ would be $$1,100\mathrm{.}00.$ The recycling system is expected to reduce costs by $$2,760\mathrm{.}00$ in year $1$ and by $$8,760\mathrm{.}00$ in year $2$ If the tax rate is $45\mathrm{.}00\%$ and the cost of capital is $7\mathrm{.}81\%,$ what is the net present value of the new recycling system project?

$$1,407\mathrm{.}25($plus or minus $$10)$

$$2,378\mathrm{.}35($plus or minus $$10)$

$$59\mathrm{.}45($plus or minus $$10)$

$$3\mathrm{.}75($plus or minus $$10)$

None of the above is within $$10$ of the correct answer