Part $1.$ A company is analyzing two machines to determine which one it should purchase. The company requires a rate of return of $15$ percent and uses straight line depreciation to a zero book value over the life of its equipment. Ignore bonus depreciation. Machine A has a cost of $$504,000$ annual aftertax cash outflows of $46,200$ and a four year life. Machine B costs $848,000$ has annual aftertax cash outflows of $16500$ and has a seven year life. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should the company purchase and how much less is that machine$$s EAC as compared to the other machine$$s $?$

$*$ B; $17,521\mathrm{.}94$

$*$ A; $24\mathrm{.}321\mathrm{.}02$

$*$ B; $23,156\mathrm{.}82$

$*$ A; $17,404\mathrm{.}04$

$*$ B; $2,408\mathrm{.}15$

Part $2.$ A project has an accounting break even quantity of $30000$ units a cash break even quantity of $17120$ units, a life of $10$ years. Fixed costs of $178000$ variable costs of $18\mathrm{.}40$ per unit and a required return of $14$ percent. Deprecation is straight line to zero over the project life. Ignoring taxes, what is the financial break even quantity?

A$.39548$ units$$

B$.41543$ units$$

C$.41813$ units$$

D$.39624$ units$$

E$.39320$ units

Part $3.$ Assume a firm utilizes the security market line approach to determine the cost of equity. if the firm currently pays an annual dividend of $$2\mathrm{.}40$ per share and has a beta of $1\mathrm{.}42$ all else constant, which of the following actions will increase the firm's cost of equity?

A$.$ decrease in the dividend amount$$

B$.$ an increase in the dividend amount

C$.$ a decrease in the market rate of return$$

D$.$ a decrease in the risk$-$free rate

E$.$ a decrease in the firm's beta