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You must wvaluate a proposat to buy a new miling machine. The purchase price of the miling machine, including shipping and installation costs, 18 5115,000, and the equipment will be fully deprecated at the time of purchase. The machine would be soldater 3 years for $48.000. The machine would require a $10,000 Increase in net operating working capital (increased inventory lost increased accounts pavabla) There would be no affect on revenues, but preta labor costs would decline by 143,000 per year. The marginal tax rate 25and the WACC 11. Also, the firm part 14.500 last year investigating the feasibety of using the machine & How should the 14.500 spent year behandled? 1. Last year's expenditure is considered a sunk cout and does not represent an incremental cash now. Hence, it should not be included in the analysis IL The cost of research is an incremental cash flow and should be included in the analysis III. Only the tax effect of the research expenses thould be included in the way 1. Last year's expenditure should be treated as a terminal cash flow and dent with at the end of the project's I. Hence, it should not be included in the initial investment V. Last years expenditure is considered an opportunity coat and does not represent an incremental cash now. Hence, it should not be included in the analysiu Select b. What is the initial investment outlay for the machine for capital budgeting purposes after the 100 bonus depreciation is considered, that is what is the rear o project cash flow? Enter your answer as a positive value. Round your answer to the nearest do outley 6. What are the project's mnunl cash flow during years 1; 2, and ? Do not round intermediate calculations. Roun Round your answers to the nearest dole Yes is Year 23 Years d. Should the machine be purchased Select ou must evaluate the purchase of a proposed spectrometer for the RBD department. The purchase price of the spectrometer including modifications $160,000, and the equipment will be y depreciated at the time of purchase. The equipment would be sold after years for $76,000. The equipment would reque a $15,000 increase in net operating working capital (spare arts inventory). The project would have no effect on revenues, but it should save the firm 40,000 per year in before tax labor costs. The firm's marginal federal-plus-state tax rate 254 What is the initial investment outlay for the spectrometer after bonus depreciation is considered that is what is the Year o project chth flow? Enter your answer *** poutive value Round your answer to the nearest dollar b. What are the projects annual cash flows in Years 1.2 and ? Do not found intermediate calculations, Round your answers to the nearest to Year 116 Year 216 Year 315 c. If the WACC Is 10, should the spectrometer be purchased -Sel Grade it Now Save & Continue Continue without saving