2. PepperDish Industries, a manufacturer of eco-kitchen utensils, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. Existing Machine Cost = $100,000 Purchased 2 years ago Depreciation using MACRS Over a 5-year recover schedule Current market value = $105,000 Five year usable life remaining Facts Proposed Machine Cost = $150,000 Installation = $20,000 Depreciation-the MACRS 5-year recovery schedule will be used Five year usable life expected Year Earnings before Depreciation and Taxes Existing Machine Proposed Machine 1 $160,000 Year 1 $170,000 2 150,000 2 170,000 3 140,000 3 170,000 4 140,000 4 170,000 5 140,000 5 170,000 At the end of year 5, the new machine is expected to be sold at $80,000. Meanwhile the old machine is expected to be sold at $30,000. The firm pays 40 percent taxes on ordinary income and capital gains. The company's capital structure consists of 60% equity and 40% debt. The cost of equity and cost of debt are 20% and 10% respectively. Given the information above, should the project be accepted? Use the NPV criteria. 3. Gayes Dale.Co is interested in making sure it has enough money to finance its assets. The company's current assets and fixed assets for the months of January through December are given in the following table. April Month Current Assets January $60,000 February 58,000 March 55,000 47,000 May 40,000 June 41,000 July 40,000 August 37,000 September 38,000 October 33,000 November 40,000 December 50,000 Fixed Assets Total Assets $70,000 $130,000 70,000 128,000 70,000 125,000 70,000 117,000 70,000 110,000 70,000 111,000 70,000 110,000 70,000 107,000 70,000 108,000 70,000 103,000 70,000 110,000 70,000 120,000 What strategy will you choose if you are the CFO of GayesDale.Co, Aggressive or Conservative? Why