Shunt Technology will spend $800,000 on a piece of equipment that will manufacture fine wire for the electronics industries. The shipping and installation charges will be $240,000 and net working capital will increase $48,000. The equipment will replace an existing machine that has a salvage value of $75,000 and a book value of $125,000. If Shunt has a current marginal tax rate of 34 percent, what is the net investment?

A) $1,030,000
B) $1,163,000
C) $1,033,000
D) $996,000

The net investment is calculated as the total cost of the new equipment plus shipping and installation, plus the increase in net working capital, minus the after-tax salvage value of the old equipment. The calculation is as follows: $800,000 (equipment) + $240,000 (shipping and installation) + $48,000 (increase in net working capital) - ($75,000 - 34% * ($75,000 - $125,000)) = $800,000 + $240,000 + $48,000 - ($75,000 - $17,000) = $1,088,000 - $58,000 = $1,030,000. However, the correct calculation for the after-tax salvage value should consider the tax impact on the difference between the salvage value and the book value. The tax savings from the loss on the sale of the old equipment is 34% * ($125,000 - $75,000) = $17,000. Therefore, the net cash inflow from the salvage is $75,000 + $17,000 = $92,000. The correct net investment calculation is $800,000 + $240,000 + $48,000 - $92,000 = $996,000.