Head, Inc Is Deciding Whether to Automate One Phase of Its

Head, Inc. is deciding whether to automate one phase of its production process. The equipment has a six- year life and will cost $450,000. Projected net cash inflows from the equipment are as follows:
(Note: Present value tables are needed.)
$$\begin{array} { | l | l | } \hline \text { Year 1 } & \$ 130,000 \\\hline \text { Year 2 } & \$ 125,000 \\\hline \text { Year 3 } & \$ 110,000 \\\hline \text { Year 4 } & \$ 100,000 \\\hline \text { Year 5 } & \$ 95,000 \\\hline \text { Year 6 } & \$ 90,000 \\\hline\end{array}$$ Head, Inc.'s hurdle rate is 12%. Assume the residual value is zero. If Head, Inc. decides to refurbish the equipment at a cost of $50,000 at the end of year 6, it could be used for one more year and would have a $30,000 residual value. Assume the cash inflow in year 7 is $40,000. What is the NPV of the refurbishment?

A) $6,290
B) $7,130
C) $13,560
D) $18,080