36&37

3) Project 2 C) Projects 1 and 2 D) Neither project is acceptable. 36) Kingston Corp. is considering a new machine that requires an initial investment of $480,000 installed, and has a useful life of 8 years. The expected annual after-tax cash flows for the machine are $89,000 for each of the 8 years and nothing thereafter. a. Calculate the net present value of the machine if the required rate of return is 11 percent. b. Should Kingston accept the project (assume that it is independent and not subject to any capital rationing constraint)? Explain your answer. 37) Consider two mutually exclusive projects X and Y with identical initial outlays of $600,000 and useful lives of 5 years. Project X is expected to produce an after-tax cash flow of $180,000 each year. Project Yis expected to generate a single after-tax net cash flow of $1,015,000 in year 5. The discount rate is 14 percent. a. Calculate the net present value for each project. b. What decision should you make regarding these projects