Marlin Manufacturing is considering whether to add new capacity to its production line with the addition of a $700,000

assembly center. The purchase would result in an increase in earnings before interest and taxes of $500,000 per year. It would cost $80,000

after taxes to install the needed equipment; in addition, to operate this machine properly, workers would have to go through a brief training session that would cost $40,000

after taxes. Also, because this machine is extremely efficient, its purchase would necessitate an increase in inventory of $160,000. This machine has an expected life of 10 years, after which time it would have no salvage value. Assume the use of the simplified straight-line method to depreciate this machine down to zero, a 29 percent marginal tax rate, and a required rate of return of 9 percent.

a. The initial cash outlay associated with this project is $nothing. (Round to the nearest dollar.)

b. The annual net cash flows associated with this project for Years 1 through 9 are $nothing. (Round to the nearest dollar.)

c. The terminal cash flow in year 10 (that is, the annual free cash flow in Year 10 plus any additional cash flow associated with termination of the project) is $nothing. (Round to the nearest dollar.)

d. Given the information, the machine(Select the best choice below.)

A. Should not be purchased because the NPV is $1,892,102, making it an unacceptable investment for the company.

B. Should be purchased because the NPV is $1,892,102, making it a worthwhile investment for the company.