In order to increase production capacity, Gunning Industries is considering replacing an existing production machine with a new technologically improved machine effective January 1, Year 1. The following information is being considered by Gunning Industries . The new machine would be purchased for $160,000 in cash. Shipping, installation, and testing would cost an additional $30,000 A The new machine is expected to increase annual sales by 20,000 units at a sales price of $40 per unit. Incremental operating costs are comprised of $30 per unit in variable costs and total fixed costs of $40,000 per year. The investment in the new machine will require an immediate increase in working capital of $35,000 Gunning uses straight-line depreciation for financial reporting and tax reporting purposes. The new machine has an estimated useful life of five years and zero salvage value. . . Gunning uses straight-line depreciation for financial reporting and tax reporting purposes. The new machine has an estimated useful life of five years and zero salvage value. Gunning is subject to a 40 percent corporate income tax rate. Gunning uses the net present value method to analyze investments and will employ the following factors and rates. Present Value of an Present Value of Ordinary Annuity of Period $1 at 10% $1 at 10% 1 909 909 2 826 1.736 Present Value of an Present Value of Ordinary Annuity of $1 at 10% $1 at 10% Period 1 909 .909 2 .826 1.736 3 .751 2.487 4 .683 3.170 5 .621 3.791 Gunning Industries' net initial cash outflow in a capital budgeting decision would be Gunning Industries' net initial cash outflow in a capital budgeting decision would be: O $190,000 $195,000 $204,525 $225,000