The Ojojo Company is considering the purchase of a new machine to replace an old one. The machine currently being used has a book value and a market value of zero but is in good shape and could last another six years. However, the proposed replacement machine will be more efficient so the company engineers think that it will produce after-tax cash flow savings of $30,000 per year (includes operating cash flows and tax benefit from depreciation). This new machine costs $155,000 delivered and installed and has a useful life of 6 years with zero salvage value. The company's WACC is 8% and its marginal tax rate is 20%. Should the new machine be purchased?

No, the net present value of the new machine is -$24,428

No, the net present value of the new machine is -$16,314

Yes, the net present value of the new machine is $22,433

Yes, the net present value of the new machine is $43,995

Yes, the net present value of the new machine is $54,139

Cappy's Snacks has been considering a new project. The first year's cash flow (CF1) for this project is expected to be $405,000. However, it has just come to light that this project is likely to cannibalize other projects of the company resulting in lost before-tax cash flows of $37,500. If the company's tax rate is 20%, what is your revised estimate of the project's first year cash flow?

$367,500

$375,000

$397,500

$438,750

$442,500