1) Chapman Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine for $390,000 is estimated to result in $135,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a pretax salvage value at the end of the project of $198,000. The MACRS rates are .2,.32, .192, 1152, .1152, and .0576 for Years 1 to 6, respectively. Ignore bonus depreciation. The press also requires an initial investment in inventory of $8,000, along with an additional $1,500 in inventory for each succeeding year of the project. The inventory will return to its original level when the project ends. The shop's tax rate is 21 percent and its discount rate is 16 percent. Should the firm buy and install the machine? Why or why not? A) Yes; The net present value is $47,048.86. B) Yes; The net present value is $44,319.97. C) Yes; The net present value is $56,329.09. D) No; The net present value is $56,652.88. E) No; The net present value is -$36,329.09. 2) Which one of the following is the best example of two mutually exclusive projects? A) Waiting until a machine finishes molding Product A before being able to mold Product B B) Using an empty warehouse to store both raw materials and finished goods C) Promoting two products during the same television commercial D) Building a furniture store beside a clothing outlet in the same shopping mall E) Producing both plastic forks and spoons on the same assembly line 3) Applying the discounted payback decision rule to all projects may cause: A) the most liquid projects to be rejected in favor of the less liquid projects. B) projects to be incorrectly accepted due to ignoring the time value of money. C) some projects to be accepted which would otherwise be rejected under the payback rule. 0919b D) some positive net present value projects to be reiected n ov E) a firm to become more long-term focused. to visit da shvati nomi d e in the