1. Peter is considering the purchase of one of two machines used in his industrial plant. Machine P has a life of two years, costs $50 initially, and then $65 per year in maintenance costs. Machine Q has a life of 3 years, costs $80 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? Explain. The discount rate is 14% and the tax rate is zero. 2. A new tablet project for the WOO company has the following data. The estimated sales price of the new tablet is $400 and sales volume to be 1,000 units in year 1, 1,250 units in year 2, and 1,325 units in year 3. The project has a three-year life. Variable costs amount to $225 per unit and fixed costs are $120,000 per year. The project requires an initial investment of $185,000, which is depreciated straight-line to zero over the three-year project life. The actual market value of the initial investment at the end of year 3 is $45,000. Initial net working capital investment is $60,000 and NWC will maintain a level equal to 15% of sales each year thereafter. The tax rate is 34% and the required return on the project is 12%. Given the $60,000 initial investment in NWC, what change occurs for NWC during year 1? Explain