XYZ is considering buying a new, high efficiency interception system. The new system would be purchased today for $46,100.00. It would be depreciated straight-line to $0 over 2 years. In 2 years, the system would be sold for an after-tax cash flow of $13,900.00. Without the system, costs are expected to be $100,000.00 in 1 year and $100,000.00 in 2 years. With the system, costs are expected to be $79,800.00 in 1 year and $67,500.00 in 2 years. If the tax rate is 48.40% and the cost of capital is 8.70%, what is the net present value of the new interception system project?

Answers:-

$10641.91 (plus or minus $50)

$9151.12 (plus or minus $50)

$13428.21 (plus or minus $50)

$12536.65 (plus or minus $50)

None of the above is within $50 of the correct answer