Question: JB Enterprises is considering replacing a 3 - year - old computer system with a new, improved system. The company paid an engineering firm $

JB Enterprises is considering replacing a3-year-old computer system with a new, improved system. The company paid an engineering firm $1,000 to review new systems and make a recommendation. Based on their recommendation, a new system has been selected that allows for better order processing and production efficiency. If the new system is purchased, revenues are expected to increase by $5,000 per year and operating costs are expected to decrease by $2,500 per year. The new system will cost $9,000 plus $200 for shipping and $800 for installation. Both the old and the new computer systems are3-year MACRS assets for depreciation purposes. Depreciation rates are33.33% in year one, 44.44% in year two, 14.82% in year three, and7.41% in year four. The company's tax rate is40%. If the new system is purchased, the old computer system will be sold for $2,000. The old system originally cost $6,000. Additional net working capital of $600 will be required for this project. After 3 years, the new system will be obsolete and will be replaced. JB Enterprises expects the salvage value of the new system to be $900 at the end of year three.
The net cash flow(NCF) for year two of teh project is:

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