puipment will be fully depteciated at the time of purchase. The machine would be sold after 3 years for $102,000. The machine would require a $4, 000 encrease in net beesting wooking capital (increased imentory lest increased accounts payahle). There would be no elfect of revenues, but pretak labor costs would declire by 534,000 Sex. The margial taxc rate is 25\%6, and the WACC is 12%. Also, the firm spent 94,500 last yeat investigating the feasibilay af using the machine a. How should the 54,500 spent last year be handed? 1. Last year's expensiture is cotsidered an oppoctunity cost and does not represent an incremental cash flow. Hence, is shoald not be induded in the analyss II. Last year's expenditure is coesidered a sunk cost and does not represent an incremental cash flow. Hence, if should not be incluted ifi the analysas. III. The cost of research is an incremental cash tlow and should be included in the analysic. IV. Only the tax effect of the research expenses should bet included in the analysis. V. Last year's expenditure stwould be treated as a terminal cash flow and dealt with at the end of the project's life, Hence, it thould not be inchuded in the initial ifivestivent cutlior. cash flow? Enter vour arwwer as a porstive value. Nocend vour arterwer to the nearest delliat. 1 Yeat 1:4 Year 2:5 veat 3:5