5. If the profitability index is less than 1, which of the following statements is correct?

Group of answer choices

the NPV is negative

the IRR is greater than the cost of capital

the NPV is positive

the NPV is also equal to 1

the NPV is 0

7. Blue Sky Corporation purchased a machine for use in the firm's manufacturing process. The original cost of the machine was $1,800,000. The machine has a class life of 15 years, but after 13 years, the firm has decided to sell the machine for $320,000. If Blue Sky has a marginal tax rate of 34%, what is the tax effect associated with the decision?

Group of answer choices

$27,200 refund

$136,000 payment

$27,200 payment

$108,000 payment

$40,800 refund