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Problem Statement Questions for 10s.8-10s.10 A firm is trying to choose between two machines to manufacture a new line of office furniture. The financial data for each machine have been compiled as fol- lows: Machine B Machine A $20,000 Initial investment required Service life 6 years $12,000 3 years $3,000 $2,500 $5,000 $4,000 Salvage value Annual operating expenses Annual operating revenue Depreciation method $15,000 $12,500 5-year MACRS 5-year MACRS The firm's marginal tax rate is 40% and uses a 15% discount rate to value the projects. Also, assume that the required service period is indefinite. 10s.10 Using the replacement chain method (machine B can be replaced with an identical machine at the end of year 3), determine which project should be adopted after tax. (a) Machine A (b) Machine B (c) Either machine (d) Neither machine