The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's R&D department. The equipment's basic price is $115,561, and it would cost another $12,840 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year class, would be sold after 3 years for $46,224. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $6,795. The machine would have no effect on revenues, but it is expected to save the firm $49,963 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 21.0% and its cost of capital is 14.0%. How much is the year 2 NOPAT for this project?

1. ($5,272)
2. ($4,277)
3. ($5,618)
4. ($4,037)
5. ($4,770)