Use the Following to Answer Questions

Use the following to answer questions:
(CMA adapted) Steinberg Industries is considering replacing an existing production machine with a new technologically improved machine effective January 1, 2009. The following information is being considered by Steinberg:
● The new machine would be purchased for $190,000, including costs for shipping, installation, and testing.
● The new machine is expected to increase annual sales by 20,000 units at a sales price of $40 per unit. Incremental operating costs include $30 per unit in variable costs and total fixed costs of $40,000 per year.
● The investment in the new machine will require an immediate increase in working capital of $40,000. This cash outflow will be released at the end of year 5.
● Steinberg uses straight-line depreciation for financial reporting and tax reporting purposes. The new machine has an estimated useful life of 5 years and no salvage value is used in calculating depreciation.
● Steinberg is subject to a 40% income tax rate.
● Steinberg will sell the fully depreciated machine for $20,000 at the end of year 5.
● Steinberg uses the net present value method to analyze investments and will use the following factors and rates:

-The acquisition of the new production machine by Steinberg Industries will contribute a discounted net-of-tax contribution margin of:

A) $200,000
B) $120,000
C) $758,200
D) $454,920