Problem 3. (8 marks) Over the past year, the LUX Lighting Corporation has spent $75,000 investigating...

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Problem 3. (8 marks) Over the past year, the LUX Lighting Corporation has spent $75,000 investigating alternative machines and has identified one candidate. The machine will cost $100,000 and is expected to generate annual operating cash flows of $50,000 in years 1 to 5, and $30,000 per year for years 6 and 7. The machinery has a CCA rate of 15% and is expected to have no salvage value at the end of the 7 years. Assume the asset class remains open after the asset is sold. The firm's marginal tax rate is 45%. If the appropriate discount rate is 10%, should the LUX Lighting Company buy the machine? Support your recommendation with any necessary calculations. Show your work clearly in order to obtain part marks - recommendations without support will receive a zero. Problem 3. (8 marks) Over the past year, the LUX Lighting Corporation has spent $75,000 investigating alternative machines and has identified one candidate. The machine will cost $100,000 and is expected to generate annual operating cash flows of $50,000 in years 1 to 5, and $30,000 per year for years 6 and 7. The machinery has a CCA rate of 15% and is expected to have no salvage value at the end of the 7 years. Assume the asset class remains open after the asset is sold. The firm's marginal tax rate is 45%. If the appropriate discount rate is 10%, should the LUX Lighting Company buy the machine? Support your recommendation with any necessary calculations. Show your work clearly in order to obtain part marks - recommendations without support will receive a zero.