1- AEG Co. is evaluating the proposed acquisition of a new machine. The machine base price is $108000and it would cost another $12500 to modify it for special use by your firm. The machine falls in MACRS 3 -year class (33%,45%,15%,7%), and it would be sold after three years for $65000. The machine would require an increase in net operating working capital of $5500. The machine would have no effect on revenue, but it is expected to save the firm $44000 per year in before tax operating costs, mainly labor. AEG's marginal tax rate is 35%, the new machine has no salvage value after four years. a- What is the net cost of the machine for capital budgeting purposes? (year 0 cash flow). b- What are the net operating cash flows in the years 1, 2, & 3?, C- What is the terminal year cash flow? d- If the project cost of capital is 12% should the machine be purchased