You must evaluate the purchase of a spectrometer for a firm. 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 will be depreciated to zero value over the 3 years using prime cost (straight line) method. The machine would be sold after 3 years for $60,000. The machine would require a $8,500 increase in net working capital and fully recover at the end of its 3-year life. The equipment should save the firm $50,000 per year in before-tax labor costs.

Below shows the forecasted sales revenues, variable cost and fixed cost.

	Year 1	Year 2	Year 3
Sales quantity (units)	4,000	5,000	5,500
Selling price per unit	$4	$4	$4
Fixed cost of production (per year)	$1,500	$1,500	$1,500
Variable cost of production (per unit)	$1.1	$1.1	$1.1

The marginal tax rate is 40% and the discount rate is 10%.

What is the net present value (NPV) of the proposed project?