2. Builtrite B is considering the purchase of a new machine for $200,000. This machine is expected to reduce annual labor costs by $50,000 (before depreciation and taxes). Employees would have to go through a brief training session that would cost $5000 in order to operate the machine properly. The new machine would also cost $5000 to install and would require an increase in net working capital of $20,000. The new machine has an expected life of 10 years and will be depreciated (SL) down to $0.

It will also have no salvage value at the end of the ten years. Assume a 34% marginal tax rate and a required rate of return of 10%. Should Builtrite B purchase this machine?