munt evaluate a proposal to buy a new miling trachine. The purchase price of the milling machine, induding shippong and installation costs, is 5121,000 , and the equiprnent w I be fully. arecated at the time of purchase. The machine would be sold after 3 years for 564,000 . The machine would require a 57,500 increase in net operating working capital (increesed inventory less reased actounts payable). There would be no elfect on revenues, but pretax labor costs would decline by 545,000 per yeac. The marginal tax rase is 25%, and the Wacc is 11 . W. Aso, the firm $4,500 las year investigating the feasibility of using the machine. a, How should the $4,500 spent lask year be handiod? T. Lad year's expendeure should be treated as a termunal cast llow and dealt with at the end of the project's life. Hence, it ahould not be induded in the inital investinent outlon: If. Last year's eqpenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, at should net be included in the analysi. 1il. Last year's expenditure is considered a sunk cost and does not represent an inceenental cash flow. Hence, it should not be induded in the analysis. T. The cost of resesch is an incremental cash fow and should be included in the analysis. V. Only the tax rifect of the research empenses thould be included in the analysis. 6. What is the initial imestment ougly for the machine for capital budgeting purposes after the soow benus depreciation is considered, thot w; whac is the Yeir o propect cash flow? Enter . voar antwer acs nositive value. foome your arwwer to the peareut dellar. 5 ic What are the troied's anrual cask flows during Years 1, 2, and 37. Do not round intermediate cakulations. pocind your answens to the neareet dollor. Yeer 1 is Year 7:5 vear 3:5 1. Shadalt the quachine te purchmed