The company is considering a project to improve their production efficiency. They are trying to decide whether it is a good idea or not to buy an automated machine which will result in reducing pre-tax costs by $200,000 for each of the next five years. The machine will cost $475,000 and the IRS says it must be depreciated as 5-year MACRS equipment. The company believes they can sell the machine for $80,000 at the end of five years. The machine will require an initial investment to increase inventory by $30,000, and then an additional inventory increase of $5,000 for each succeeding year of the project. At the end of the project, inventory will return to its normal level. The companys tax rate is 35% and uses a discount rate of 14% APR with annual compounding.

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

What is the after-tax salvage value of the equipment at the end of the project?

61,576

47,760

25,716

55,076

94,284