Delta Widget Corp. (DWC) is considering whether to purchase anew widget-producing machine at a cost of $900,000. The machinewould produce 100,000 widgets per year during its useful life ofthree years, and would be depreciated for tax purposes at a rate of$300,000 per year. No salvage value is expected. Currently, widgetprices are $15. The materials and labor required to produce awidget cost $9. The inflation rate is expected to be 3% per year,and the prices of both widgets and widget inputs are expected toincrease at the inflation rate. The tax rate is 34%. (a) Given therelatively low risks of producing for the widget market, DWCmanagement believes that a 4% real discount rate is appropriate.What nominal discount rate should be used? (b)Compute the netnominal post-tax cash flows resulting from the purchase of a widgetmachine on a year-by-year basis. Assume that all cash flows exceptthe initial $900,000 investment occur at year-end. (c) Compute theNPV of the widget machine. Identify whether each of the followingwould increase or decrease the NPV of the widget machine, andbriefly explain why – no computations are required : (d) Anincrease in the real discount rate. (e) An increase in theprojected inflation rate. (f) A revised forecast where widgetprices increase at a slower rate than the general inflation rate.?