Dexter Smith & Co. is replacing a machine simply because it has worn out. The new machine will not affect either sales or operating costs and will not have any salvage value at the end of its 5-year lifE. The firm has a 34 percent tax rate, uses straight-line depreciation over an asset's life, and has a positive net incomE. Given this, which one of the following statements is correct?
A. As a project, the new machine has a net present value equal to minus one times the machine's purchase pricE.
B. The new machine will have a zero rate of return.
C. The new machine will generate positive operating cash flows, at least in the first few years of its lifE.
D. The new machine will create a cash outflow when the firm disposes of it at the end of its lifE.
E. The new machine creates erosion effects.