13.

Artistic Adobes is considering growing its business by adding a paint machine that costs

$100,000. The machine will generate an additional $33,800 in before-tax operating

income (excluding depreciation) for the next five years. At the end of five years, the

machine can be sold for $9,500. The machine falls into the MACRS 3-year class (pg. 184

or 205). Artistics marginal tax rate is 39%, and its required rate of return is 13%. Should

Artistic purchase the machine?