Drew owns and operates an onion packing plant. To help reduce costs on labor and to increase efficiency, Drew is considering purchasing an automatic 50 lb. bagging machine and a machine that automatically stacks the 50 lb. bags onto pallets. The cost of the two machines combined and their installation is $300,000. Drew will make a 20% down payment and finance the rest of the machinery with an amortized loan over 15 years at a 5.5% interest rate. Drew predicts that by using these two machines, his plant will be able to increase output, therefore increasing operating receipts by $30,000 per year. Also, this machinery will save him approximately $10,000 in labor costs each year by the increase in efficiency. However, other operating expenses such as electricity and insurance will increase by approximately $5,000 per year. Drew assumed a straight-line depreciation over 15 years and the life of the investment is 7 years. The real terminal value is $180,000 after the 7 years, and Drew requires a pretax 12% rate of return to capital. The marginal tax rate over the next 10 years is 30%, the rate of inflation is 2.5% and the risk premium is 2% What is the nominal pre-tax terminal value? a $180,000 b.$221,377.30 C.$206,763,42 d.$213,963.44 What is the after-tax, risk adjusted discount rate? 3.9.6% 6.10% c.8.25% 0.9.8% What are the tax savings from depreciation? a.$5,000 b.$7.142.86 c.$6,000 d.$4.000 What is the after-tax terminal value? a $180,000 b.$197,410.74 c.$206,032.97 d.$197,774.4 What is the nominal after-tax net return in year 67 a.$28,412.49 b.$35,000 c.$31,343,87 d.$31,532.55 What is the net present value? a.($4,541.74) b.$4,541.74 C.($27,791.53) d./$36,327.41)