13. The payback method of capital budgeting has which of the following problems? a. penalizes cash flows that occur late in the life of the project b. accepts projects that have payback periods longer than the firm's established maximum c. rejects projects that have payback periods shorter than the firm's established minimum d. ignores cash flows occurring after payback of the initial investment e. all of the above 14. Lipstick, Inc. is considering replacing an existing tinting system with a new one. The new system would allow for additional colors to be produced and would increase sales revenue by $1,200,000 per year. Additional non-depreciation operating costs would be $800,000 per year. Annual depreciation on the new machine would be 320,000, while annual depreciation on the existing machine is S200,000. Lipstick has a 30% tax rate. What is the annual differential after-tax cash flow associated with this replacement project? a. $298,000 b. $304,000 c. $308,000 d. $316,000 e. $324,000