Attempts: 2 Average: 2/6 1. Problem 12.09 (New Project Analysis) eBook You must evaluate a proposal to buy a new milling machine. The base price is $117,000, and shipping and installation cc are 33%, 45%, 15%, and 7%. The machine would require a $8,500 increase in net operating working capital (increased rate is 35%, and the WACC is 12%. Also, the firm spent $4,500 last year investigating the feasibility of using the machin a. How should the $4,500 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 pr IV. Last year's expenditure is considered an opportunity cost and does not represent an incremental case V. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. -Select b. What is the initial Investment outlay for the machine for capital budgeting purposes, that is, what is the Year o c. What are the project's annual cash flows during Years 1, 2, and 3? Do not round intermediate calculations. Ro Year 1: $ Year 2: $ Year 3: $ d. Should the machine be purchased? -Select- Grade it Now Save & Continue Continue without saving JUL 30 add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $52,650. The applicable depreciation rates Mess Increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $59,000 per year. The marginal tax . Hence, it should not be included in the initial Investment outlay. noe, it should not be included in the analysis hould not be included in the analysis cash flow? Enter your answer as a positive value. Round your answer to the nearest cent. answers to the nearest cent. ))) @ tv LI (oe Attempts: 2 Average: 2/6 1. Problem 12.09 (New Project Analysis) eBook You must evaluate a proposal to buy a new milling machine. The base price is $117,000, and shipping and installation cc are 33%, 45%, 15%, and 7%. The machine would require a $8,500 increase in net operating working capital (increased rate is 35%, and the WACC is 12%. Also, the firm spent $4,500 last year investigating the feasibility of using the machin a. How should the $4,500 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 pr IV. Last year's expenditure is considered an opportunity cost and does not represent an incremental case V. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. -Select b. What is the initial Investment outlay for the machine for capital budgeting purposes, that is, what is the Year o c. What are the project's annual cash flows during Years 1, 2, and 3? Do not round intermediate calculations. Ro Year 1: $ Year 2: $ Year 3: $ d. Should the machine be purchased? -Select- Grade it Now Save & Continue Continue without saving JUL 30 add another $8,000. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $52,650. The applicable depreciation rates Mess Increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $59,000 per year. The marginal tax . Hence, it should not be included in the initial Investment outlay. noe, it should not be included in the analysis hould not be included in the analysis cash flow? Enter your answer as a positive value. Round your answer to the nearest cent. answers to the nearest cent. ))) @ tv LI (oe