QUESTION 14 Assume a machine costs $108,000 and lasts six years before it is replaced. The operating cost is $17.200 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 15 percent? (Hint: the EAC should account for both initial investment and annual operating costs) $51,038.66 $49.410.03 $47,882.18 $45,737.59 $43,781.23 QUESTION 15 Marco Production had a current share price of $79, and the firm had 1,200,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $10,000,000 investment but will produce cash flows of $4,700,000, $5,100,000, $8,700,000, and $7,200,000 in years 1 to 4, respectively. The aftertax salvage value when the project closes is $1,200,000 If Marco Production invests in the project, what would the new share price be? Marco Production's cost of capital is 15%. (Hint: consider how the project NPV affects the stock price) $82.29 $81.57 $80.43 $82.72 $81.06 QUESTION 16 Cabot Enterprise is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 15 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $720,000, annual operating costs of $50,000, and a 8-year life. Machine B costs $350,000, has annual operating costs of $110,000, and a 5- year life. The firm currently pays no taxes. Which machine should be purchased and why? Machine A; because it will save the company about $4,662 a year Machine A; because it will save the company about $3,958 a year Machine B; because it will save the company about $5,018 a year Machine B; because it will save the company about $4,195 a year Machine B; because it will save the company about $3,371 a year