Click here to read the book Analysis of an Expansion Project NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new miting machine. The base price is $177,000, and shipping and installation costs would add another $10.000. The w ine the MAORS 3 years, and it would be soldater years for $79,650. The applicable depreciation rates are 33%. 45% 15, and the machine would increas i ng working capital increased inventory increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $40,000 per year. The marginal tax rate is 35%, and the WACC SA, the firm spent 55.000 a year investigating the feasibility of using the machine a. How should the $5,000 spent last year be handled L Last year's expenditure should be treated as a terminal cash flow and deak with at the end of the project e induced in the investment outlay IL Last year's expenditure is considered as an opportunity cost and does not representan o . Hence it should not be included in the analysis TIL Last year's expenditure is considered as a sunk cost and does not representan mental a n d be included in the analysis IV. The cost of research is an incremental cash flow and should be included in the analyse V. Only the tax effect of the research expenses should be included in the analysis are project cash Round your answer to the nearest cent b. What is the initial investment outlay for the machine for capital budgeting purposes that is what mediate calculations What are the project's annual cash flows during Years 1, 2, and 3 Round your answer to the nearest contest round your hould the machine be purchased [-select- Save & Commer