You're evaluating a new electron microscope for the QA $($quality assurance$)$ unit. The microscope will cost $$19,000$ to buy and another $$2,000$ to install, and will be sold for $$1,800$ after $3$ years. It falls into the $3-$year MACRS class, with depreciation rates as follows:

Year $1234$

Depreciation rate $33\%45\%15\%7\%$

The microscope will require an inventory of spare parts worth $$5,000.$ The equipment will not increase revenue, but will save the company $$10,000$ in labor costs each year.

Your company's marginal tax rate $($federal plus state$)$ is $34\%$ and the appropriate cost of capital for this project is $10\%.$

What is the incremental cash flow in year $2?$

What is the net salvage value at the end of year $3?$

What is the incremental cash flow in year $3?$

What is the NPV of this project?