*** Select all Correct Answers ***
Widget Engineering is considering purchasing a robotic lathe. Thenew lathe costs $450,000 and will save an estimated $65,000 peryear before depreciation and taxes. The new lathe will bedepreciated using the straight line method over ten years to zerobook value.
The lathe that is being replaced still has 10 years of useful lifeand is being depreciated at $15,000 per year to zero book value inten years. It has a market value today of $110,000.
The company has spent $15,000 on research to determine if therobotic lathe is suitable for their use. The machine will occupyabout 800 square feet of factory floor space more than the existinglathe. Factory space in this locale currently rents for $5.00 persquare foot per month. It would be impossible for the company torent the floor space to an outside user. The company’s marginal taxrate is 30%.
Compute the initial investment for this project.
Compute the Annual Incremental After-tax Cash Flows for an NPVanalysis of this project.

Group of answer choices

A. Initial Investment is $328,000

B. Initial Investment is $343,000

C. Initial Investment is $340,000

D. Initial Investment is $355,000

E. Annual Incremental After-tax Cash Flows are $45,500 peryear.

F. Annual Incremental After-tax Cash Flows are $54,500 peryear.

G. Annual Incremental After-tax Cash Flows are $59,000 peryear.