Expansion project - Show all the steps and calculations

The ABC Corporation is considering the purchase of a new drill press for $100,000. The machine is expected to increase production, resulting in $50,000 new sales per year. The cost to operate the machine is $10,000. The machine will be depreciated on a straight-line basis to $0 over 10 years. The project will require a net increase of $15,000 in NWC at the beginning of the project and will return half that amount at the projects termination. In addition, ABC expects to sell the machine for $22,000 at the end of the project, six years from now. If the appropriate discount rate is 15%, and the marginal tax rate is 40%, should the firm accept the project? What if the discount rate is 10%? What if it is 20%?

Replacement project

Assume the same information as in Question 1 above. Now consider the acceptance of the new machine for ABC, if it is replacing an old machine also with six years of useful life. The old machine generates sales of $10,000 per year and operating costs of $4,000 per year. Additional characteristics for the old machine area as follows:

Purchase price: $50,000 Purchased 4 years ago Depreciated straight-line over 10 years down to zero Current disposal value of $30,000 Anticipated selling price in 6 years: $15,000

Should ABC purchase the new machine?