Multiple Choice Questions (The following information applies to the next seven problems.) You must evaluate a proposal to buy a new machine. Its base price is $50,000, installation costs would add another $10,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $40,000. The depreciation rates would thus be 33%, 45%, 15% and 7% for the first 4 years. The machine would require $8,000 increase in net working capital. Marginal tax rate is 40% and WACC is 10%. In addition, Fixed costs are expected to be $50,000 each year, and the firm spent $10,000 last year on market research. The below is expected information about the project. Year 2 3 Price 120 120 120 Quantity 500 450 600 Variable Cost 20000 18000 24000 1. The Initial Cash Outlay is a. 40,000 b. 50,000 0.60,000 d. 68,000 e. None of the above 2. Find the project's cash flows at t = 1. * 0 a $1000 O b. -$1920 O c. $1920 d. -$17880 e. None of the above 3. Find the project's cash flows at t = 2. * a. $2400 b. $2700 c. $3400 d. All of the above e. None of the above 09_OEVWXto-eE1pcdLufizS_g/formRespons 4. Find the project's cash flows at t = 3.* O a. $2400 O b. $2700 O c. $3400 O d. All of the above O e. None of the above 5. Find the terminal Cash Flow at t = 3. * a. $2400 b. $4200 4 C. $33680 d. $36,380 e. None of the above 6. The project's NPV is - a. $37163 O b. -$37163 c. $48000 d. $2000 e. None of the above 7. Would you accept the project? a. Yes since NPV> WACC O b. No since NPV0 d. No since NPV EAAJ. b. Project J since EAAL WACC O b. No since NPV0 d. No since NPV EAAJ. b. Project J since EAAL