Blue Sky Corporation is evaluating the proposed acquisition of a new production machine. The machine's base price is $260,000, and installation costs would amount to $25,000. An additional $10,000 in net working capital would be required at installation. The machine has a class life of 2 years. The machine would save the firm $200,000 per year in operating costs. The firm is planning to keep the machine in place for 2 years. At the end of the second year, the firm plans to sell the machine for $100,000. The firm has a required rate of return on investment projects of 10% and a marginal tax rate of 21%. What is the NPV of the project? $169,627 $96,440 $122,060 $92,717 $104,705 Blue Sky Corporation is contemplating a new investment to be financed with debt. The firm could sell new $1,000 par value bonds with a 12.5% coupon rate and semi-annual payments. The bonds would mature in 15 years. The bonds would sell at par, but flotation costs would amount to 5.5% of par value. The firm has a 21% marginal tax rate. What is the firm's after-tax cost of debt financing? 14.44% 12.50% 9.88% 10.55% 13.35%