Masters machine shop is considering a four-year project to improve its production efficiency. buying a new machine press for $425,000 is estimated to result in $169,000 in annual pretax cost savings. the press falls in the macrs five-year class, and it will have a salvage value at the end of the project of $69,000. the press also requires an initial investment in spare parts inventory of $28,000, along with an additional $3,500 in inventory for each succeeding year of the project. the shop’s tax rate is 23 percent and its discount rate is 10 percent.

James is an employee in the widget inspection department of xyz systems, a government contractor. james was part of a 3-person inspection team that found a particular batch of widgets did not meet the exacting requirements of the u.s. government. in order to meet the tight deadline and avoid penalties under the contract, james' boss demanded that the batch of widgets be sent in fulfillment of the government contract. when james found out, he went to the vice president of the company and reported the situation. james was demoted by his boss, and no longer works on government projects. james has a: