As per the companies new Long Range Plan (LRP), it is discussed and agreed increase the manufacturing capacity of the firm. As a part of the LRP decision, you are evaluating a proposal to buy a new milling machine with a purchase price of $108,000 and shipping and installation costs of would add another $12,500. The machine has a three-year life at the end of which it could be sold for $65,000. The new machine would require $5,500 increase in net working capital. There would be no effect on revenue but pre-tax labour costs would decline by $44,000 per year. The corporate tax rate is 30% and the company's cost of capital is 12%. The firm had also spent $5,000 last year investigating the feasibility of using the machine. (a) How should the $5,000 spent last year on the feasibility of using this machine be handled? (1 mark) (b) What is the initial year cash flow that is the year-0 project cash flow? (1 marks) (c) What is the projects annual net cash flows during the operational years 1,2 and 3 ? ( 2 marks) (d) Calculate the Terminal cash Flow. (1 mark) (e) Should the machine be purchased? (1 marks)