12.09 You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $115,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $47,000. The machine would require a $4,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $44,000 per year. The marginal tax rate is 25%, and the WACC is 10%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine.

What is the initial investment outlay for the machine for capital budgeting purposes after the 100% bonus depreciation is considered, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest dollar.

$_______

What are the project's annual cash flows during Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

Year 1: $____

Year 2: $ ___

Year 3: $ ____