1. Daily Enterprises is purchasing a $ 10.2 million machine. It will cost $51,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $ 4.3 million per year along with incremental costs of $ 1.5 million per year. If Daily's marginal tax rate is 35 %, what are the incremental earnings (net income) associated with the new machine?

2. One year ago, your company purchased a machine used in manufacturing for $100,000. You have learned that a new machine is available that offers many advantages and you can purchase it for $ 160,000 today. It will be depreciated on a straight-line basis over 10 years and has no salvage value. You expect that the new machine will produce a gross margin (revenues minus operating expenses other than depreciation) of $45,000 per year for the next 10 years. The current machine is expected to produce a gross margin of $ 22,000 per year. The current machine is being depreciated on a straight-line basis over a useful life of 11 years, and has no salvage value, so depreciation expense for the current machine is $9,091 per year. The market value today of the current machine is $60,000. Your company's tax rate is 38 %, and the opportunity cost of capital for this type of equipment is 12 %. Should your company replace its year-old machine?

3. Beryl's Iced Tea currently rents a bottling machine for $ 51,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $ 165,000. This machine will require $ 24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $ 255,000. This machine will require $ 20,000 per year in ongoing maintenance expenses and will lower bottling costs by $ 11,000 per year. Also, $ 39,000 will be spent up front to train the new operators of the machine. Suppose the appropriate discount rate is 8 % per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the cost of the rental machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a 10-year life with a negligible salvage value. The marginal corporate tax rate is 35 %. Should Beryl's Iced Tea continue to rent, purchase its current machine, or purchase the advanced machine? To make this decision, calculate the NPV of the FCF associated with each alternative.