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$ 4 , 5 0 0 last year investigating the feasibility of using the machine. a . How should the $ 4 , 5 0
$ last year investigating the feasibility of using the machine.
a How should the $ spent last year be handled?
I. The cost of research is an incremental cash flow and should be included in the analysis.
II Only the tax effect of the research expenses should be included in the analysis.
III. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be included in the initial investment outlay.
IV Last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
V Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis.
SelectV
$
c What are the project's annual cash flows during Years and Do not round intermediate calculations. Round your answers to the nearest dollar.
Year : $
Year : $
Year : $
d Should the machine be purchased?
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