Excel Online Structured Activity: New project analysis

You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $$130,000,$ and it would cost another $$19,500$ to

modify the equipment for special use by the firm. The equipment falls into the MA$*$RS $3-$year class and would be sold after $3$ years for $$58,500.$ The

applicable depreciation rates are $33\%,45\%,15\%,$ and $7\%.$ The equipment would require an $$14,000$ increase in net operating working capital $($spare parts

inventory$).$ The project would have no effect on revenues, but it should save the firm $$56,000$ per year in before$-$tax labor costs. The firm's marginal

federal$-$plus$-$state tax rate is $40\%.$ The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required

analysis to answer the questions below.

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Open spreadsheet

a$.$ What is the initial investment outlay for the spectrometer, that is$,$ what is the Year $0$ project cash flow? Round your answer to the nearest cent.

Negative amount should be indicated by a minus sign.

$

b$.$ What are the project's annual cash flows in Years $1,2,$ and $3?$ Round your answers to the nearest cent.

In Year $1$$

In Year $2$$

In Year $3$ $