Need assistance with below question:

Net Present Value Analysis with Taxes.Quality Chocolate, Inc., would like to purchase a new machine for $200,000. The machine will have a life of 4 years with no salvage value, and is expected to generate annual cash revenue of $90,000. Annual cash expenses, excluding depreciation, will total $10,000. The company uses the straight-line depreciation method, has a tax rate of 30 percent, and requires a 14 percent rate of return.

Required:

a. Find the net present value of this investment using the format presented in . Round to the nearest dollar.

b. Should the company purchase the machine? Explain.

Problems

company's required rate of return is 12 percent.

year 1 year 2 year 3 year 4 year 5

Equipment A

utility savings $12,000.00 $14,000.00 $15,000.00 $16,000.00 $17,000.00

additional revenue 45000 48000 50000 55000 60000

maitenance cost -5000 -8000 -10000 -13000 -16000

Equipment B

utility savings $8,000.00 $9,000.00 $10,000.00 $10,000.00

additional revenue 35000 36000 38000 42000

maitenance cost -6000 -8000 -9000 -11000

42.Required:

a. Calculate the net present value for each investment using the format presented in . (Remember to include the initial investment cash outflow and salvage value in your calculation.) Round to the nearest dollar.

b. Which, if any, investment is preferable? Explain.