hapman Machine Shop is considering a four$-$year project to improve its production efficiency.

Buying a new machine for $$390,000$ is estimated to result in $$135,000$ in annual pretax cost savings. The press

falls in the MACRS five$-$year class, and it will have a pretax salvage value at the end of the project of $$198,000.$

The MACRS rates are $\mathrm{.}2,\mathrm{.}32,\mathrm{.}192,\mathrm{.}1152,\mathrm{.}1152,$ and $\mathrm{.}0576$ for Years $1$ to $6,$ respectively. Ignore bonus

depreciation. The press also requires an initial investment in inventory of $$8,000,$ along with an additional $$1,500$

in inventory for each succeeding year of the project. The inventory will return to its original level when the

project ends. The shop's tax rate is $21$ percent and its discount rate is $16$ percent. Should the firm buy and install

the machine? Why or why not?

A$)$ Yes; The net present value is $$47,048\mathrm{.}86.$

B$)$ No; The net present value is $$$$36,329\mathrm{.}09.$

C$)$ No; The net present value is $$56,652\mathrm{.}88.$

D$)$ Yes; The net present value is $$44,319\mathrm{.}97.$

E$)$ Yes; The net present value is $$56,329\mathrm{.}09$