1. Consider a $10,000 machine that will reduce pretax operating costs by $3,000 per year over a 5-year period. Assume no changes in net working capital and a salvage value of zero. Further assume straight-line depreciation to zero, a marginal tax rate of 34%, and a required return of 10%. The project NPV is:

A) $ 83

B) $ 449

C) $ 689

D) $ 827

E) $1,235

2. You purchase a machine for $12,000, depreciated straight-line to a salvage value of $2,000 over its 4 year life. If the machine is sold at the end of the third year for $6,000, what are the aftertax proceeds from the sale, assuming your tax rate is 34%?

A) $1,010

B) $3,510

C) $5,010

D) $5,490

E) $6,990

3. You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $40 initially, and then $60 per year in maintenance costs. Machine B costs $70 initially, and requires $45 in annual maintenance costs. Either machine must be replaced at the end of its life. Which is the better machine for the firm? The discount rate is 15% and the tax rate is zero.

A) Machine A is better because its NPV is higher than the NPV of machine B.

B) Machine A is better because its EAC is $60.24, which is less than the EAC of $84.60 for B.

C) Machine B is better because its EAC is $75.66, which is less than the EAC of $90.12 for A.

D) Machine B is better because its EAC is $75.66, which is less than the EAC of $84.60 for A.

E) Neither machine should be chosen since both have a negative NPV.

plz choose an answer and explain why with formula