You're evaluating a new electron microscope for the QA (quality assurance) unit. The microscope will cost $17,000 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	1	2	3	4
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 $14,000 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 11%.

Part 1

What is the initial (year-0) incremental cash flow from the project? Choose the right sign.

Part 2

What is the incremental cash flow in year 1?

Part 3

What is the incremental cash flow in year 2?

Part 4

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

Part 5

What is the incremental cash flow in year 3?

Part 6

What is the NPV of this project?