Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's base price is $$200,000,$ and installation costs would amount to $$28,000.$ Also, $$10,000$ in net working capital would be required at installation. The machine will be depreciated for $3$ years using simplified straight line depreciation. The machine would save the firm $$110,000$ per year in operating costs. The firm is planning to keep the machine in place for $2$ years. At the end of the second year, the machine will be sold for $$100,000.$ Riverview has a cost of capital of $12\%$ and a marginal tax rate of $34\%.$

What is the NPV of the project?

$-$ $$9,783$

Richtig!

$$9,555$

$$12,155$

$$19,016$

$$3,875$