3. You have been asked by the manager of your music production company to evaluate the proposed acquisition of a new sound system for concert performances. The sound system will cost $400,000, and it will cost another $50,000 for a transportation vehicle to move the equipment to your new location. The equipment falls into the MACRS 5-year class; however, the sound system will only be used for three years and it will then be sold for $50,000. Use of the new system will require an increase in net working capital (spare parts inventory) of $15,000. The new system is expected to increase revenues by $250,000 per year due to better sound quality for concert performances. The firm's marginal tax rate is 40 percent. The project being evaluated is considered to be of average risk, and the firm's cost of capital is 11 percent. Annual percentages for MACRS depreciation 5-year class are 20%, 32%, 19%, 12%, 11%, 6%. a. What is the initial investment associated with the project? (3 pts) b. What is the depreciable basis and the depreciation schedule for this project (i.e., depreciation expense and book value for all MACRS years)? (4 pts) c. What is the after-tax operating cash flow for year 1 only? (4 pts) d. What is the terminal cash flow in the last year of the project's life? (4 pts)