1. The Corwin Company is evaluating the proposed acquisition of a new milling be shipped and installed. The machine falls into the MACRS 3-year class, and is machine. The machine's base price is $108,000, and would require another $12,500 to expected to be sold after 3 years for $65,000. The machine would require an increase in net working capital (inventory) of $5,500. The milling machine would have no effect on revenues, but it is expected to save the firm $44,000 per year in before-tax operating costs, mainly labor. Corwin's marginal (federal plus state) tax rate is 22 a. What is the net investment (or the initial investment cost) of the machine for capital percent budgeting purposes? (That is, what is the Year 0 net cash flow?) b. What are the net operating cash flows for years 1, 2 and 3? c. What is the terminal cash flow in year 3? d. If the project's cost of capital is 12 percent, should the machine be purchased? installation Custs Inrease In Inventory Etssoo IN = $126,000 - yr A lepi =(. 3333) 1205000 Den 1.4845) Idosoo (881) idosoo - - 1 Peps E:OR-A0) (1 - ) + T lo 44 ) [t-)) 48,200.78 883 1