Question: 17 of 30 Status: Unanswered User Betly Freeman Time Remaining 56 minutes 49 seconds Time Value Tables Fact Pattern: Verla Industries is trying to decide which one of the following two options to pursue. Either option will take effect on January 1st of the next year Option One-Acquire a New Finishing Machine The cost of the machine is $1,000,000, and it will have a useful life of 5 years, Net pre-tax cash flows arising from savings in labor-costs will amount to $100,000 per year for 5 years. Depreciation expense will be calculated using the straight-ine method for both financial and tax reporting purposes. As an incentive to purchase, Verla will receive a trade-in allowance of $50,000 on its current fully depreciated finishing machine Option Two-Outsource the Finishing Work Verla can outsource the work to LM, Inc, at a cost of $200,000 per year for 5 years. If it outsoarces, Verla will scrap its current fully depreciated finishing machine Verla's effective income tax rate is 40%. The weighted-average cost of capital is 10%. The firm's net present value of outsourcing the finishing work is A/ $404920 net cash outflow. B. $303,280 net cash outflow OC. $758.200 net cash outflow D. $454,920 net cash outflow Directions Select the best