3 Question 13 of 20 This question: 1 point(s) possible NO 5V (Calculating project cash flows and NPV) Weir's Trucking, Inc is considering the purchase of a new production machine for $80,000. The purchase of this new machine will result in an increase in earnings before interest and taxes of $27.000 per year. To operate this machine properly, workers would have to go through a brief training session that would cost $4,250 after tax. In addition, it would cost $4,500 after tax to install this machine correctly. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $21,000. This machine has an expected life of 10 years, after which it will have no salvage value. Finally, to purchase the new machine, it appears that the firm would have to borrow $100,000 at 10 percent interest from its local bank, resulting in additional interest payments of $10,000 per year. Assume simplified straight-line depreciation, that this machine is being depreciated down to zero a 31 percent marginal tax rate, and a required rate of return of 15 percent. id ng a. The initial cash outlay associated with this project is $(Round to the nearest dollar) b. The annual after-tax cash flows associated with this project for years 1 through 9 are 5 (Round to the nearest dollar) c. The terminal cash flow in year 10 (the annual after-tax cash flow in year 10 plus any additional cash flow associated with termination of the project) is $(Round to the nearest dollar) d. Given the information, the machine (Select the best choice below) O.A. should not be purchased because the NPV is $33.482 making it an unacceptable investment for the remnany This question: 1 point(s) possible O expect unts pay 1,000 of (1) > (Calculating project cash flows and NPV) The Chung Chemical Corporation is considering the purchase of a chemical analysis machine. Although the machine being considered will result in an increase in earnings before interest and taxes of $35,000 per year, it has a purchase price of $100,000, and it would cost an additional $5,000 after tax to correctly install this machine. In addition, to properly operate this machine, inventory must be increased by $5,000. This machine has an expected life of 10 years, after which it will have no salvage value. Also, assume simplified straight-line depreciation, that this machine is being depreciated down to zero, a 34 percent marginal tax rate, and a required rate of return of 15 percent swer gupta an 1 answers Ise find th it a. The initial cash outlay associated with this project is S. (Round to the nearest dollar) b. The annual after-tax cash flows associated with this project for years 1 through 9 are 5 (Round to the nearest dollar) C. The terminal cash flow in year 10 (that is the annual after-tax cash flow in year 10 plus any additional cash flow associated with termination of the project) is $(Round to the nearest dollar) d. Given the information the machine (Select the best choice below.) noe in W je cash O A. should not be purchased because the NPV is - $59 867 making it an unacceptable Investment for the company OB should be purchased because the NPV is $59.867 making it a worthwhile investment for the company