Project A: Major Equipment Purchase . A new major equipment purchase, which will cost $10 million; however, it is projected to reduce cost of sales by 5% per year for 8 years. . The equipment is projected to be sold for salvage value estimated to be $500,000 at the end of year 8. . Being a relatively safe investment, the required rate of return of the project is 8%. . The equipment will be depreciated at a MACRS 7-year schedule. . Annual sales for year 1 are projected at $20 million and should stay the same per year for 8 years. . Before this project, cost of sales has been 60%. . The marginal corporate tax rate is presumed to be 25%. Project B: Expansion Into Three Additional States . Expansion into three additional states has a forecast to increase sales/revenues and cost of sales by 10% per year for 5 years. . Annual sales for the previous year were $20 million. . Start-up costs are projected to be $7 million and an upfront needed investment in net working capital of $1 million. The working capital amount will be recouped at the end of year 5. . The marginal corporate tax rate is presumed to be 25%. . Being a risky investment, the required rate of return of the project is 12%. Project C: Marketing/Advertising Campaign . A major new marketing/advertising campaign, which will cost $2 million per year and last 6 years. . It is forecast that the campaign will increase sales/revenues and costs of sales by 15% per year. . Annual sales for the previous year were $20 million. . The marginal corporate tax rate is presumed to be 25%. . Being a moderate risk investment, the required rate of return of the project is 10%