place. Taprun Inc. is considering the purchase of a new production machine. The equipment's base price is $700,000, installation costs are approximately $22,000, and shipping fees are about $10,100. The equipment falls into MACRS 5-year class. However, the company plans on using the machine for 3 years, at which time it can be sold for an estimated price of $256,780. (MACRS 5-year: 20\%, 32\%, 19.2\%, 11.52\%, 11.52\%, 5.76\%.) This efficient new machine will produce additional sales of $196,000 per year for 3 years, and it will also result in a before-tax net reduction of costs and expenses by $74,000 per year. Use of the equipment will require an increase in spare part inventory of $21,000, an increase in prepaid expenses of $8,000, an increase in accounts payable of $5,000. The firm's marginal tax rate is 40%. a. What is the Year- 0 net cash flow? b. What are the cash flows in Years 1 and 2? c. What is the cash flow in Year 3 ? d. If the project's cost of capital is 11.11%, should the new production machine be purchased based on NPV and IRR? Why or why not