You must evaluate a proposed prism spectroscope for the R&D department of the Van Avery Prep. The base price is $140,000, and it would cost another $30,000 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class (33%,45%,15%). and would be sold after 3 years for $60,000. The equipment would require an $8,000 increase in net working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year before-tax labor costs. The firms marginal federal-plus-state tax rate is 30 percent. What is the cash flow at the end of Year 1?

a.

$35 000

b.

$52 440

c.

$91 100

d.

$51830