4 must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and instaifation costs, is 28,000 , and the equipment wal be fully depreciated at the time of purchase. The machine would be sald aiter 3 years for 550,000 , the moctine would quire s 56,500 increase in net operating working capital (increased inventory less increased accounts payable). There would be no elfect on revenues, t pretax labor costs would dechine by 544,000 per year. The morginal tax rate is 25%, and the Whcc is 1056 . Also, the firth spent $4, soo last year estigating the feasibility of using the machine. a. How should the $4,500 spent last yeor be handled? 1. Only the tax effect of the research expenses should be induded in the atalyeis. It. Last yoar's expenditure showld be treated as a terminal cash flow and dealt with at the end of the projects life. Hence, it should not be incloded in the initial investment outiay III. Last year's expenifture is considered an opportunity cost and does not represent an incremental cash llow. Hence, it should not be included in the analysis: IV. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be induded in the analysis. V. The cost of reseorch is an incremental cash flow and should be included in the analysis. b. What is the intial investment outiay for the machine for copital bodjeting pumoses after the 100 wh bonus depreciation is considered, that is, What is the Year o project cosh flow? Enter your answer as a positive walue. Round your answer to the nearest dellat. 5 c. What are the preject's annual caci flows during Years 1,2 , and 37 Do not round intermediate calculations. Round wour anwwens to tha nearmat dobar: Year 115 Year 2:5 Year 3:3 d. Shaulitithemachire be purchased