You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machines base price is $10,300.00, and it would cost another $2,370.00 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after three years for $1,650.00. The machine would require an increase in net working capital (inventory) of $770.00. The new machine would not change revenues, but it is expected to save the firm $24,185.00 per year in before-tax operating costs, mainly labor. XYZ's marginal tax rate is 32.00%.

If the project's cost of capital is 12.10%, what is the NPV of the project?

Round your answer to two decimal places. For example, if your answer is $345.667 round as 345.67 and if your answer is .05718 or 5.718% round as 5.72.

$12,670.00

$18,247.98

$30,614.46

$10,300.00

Check for the question with "Cash flows estimation and capital budgeting:" in this test and answer the following questions (show your work in details here):

a. What is the initial cash outlay?

b. What are the free cash flow for year 1?