Test #3 (80 pts) OCF (EBIT + Depreciation Taxes) After-Tax Salvage value = Selling Price-Iselling Price-Book Value) OCF (Sales-Costs)*(1-T)(Depreciation T) 2) (7 points) Company Z is considering purchasing an automated machine which is estimated to reduce expenses by $72,000 per year. The machine will have no effect on revenues but is expected to pay for itself from the cost savings, The machine costs $200,000 and will be depreciated on a MACRS (I have calculated the depreciation below). The machine is expected to be sold after 3 years for $45,000. The purchase of the machine would require an increase in net working capital of $5,500 at ts0, and the net working capital is expected to be recovered at t-3. Company Z's marginal tax rate is 27%. Fin in the following information. (You do not have to calculate NPV of the project) Year O Year 1 Year 2 Year 3 Operating Cash Flow Net working Capital pital Spending reciation of Equipment Project Income Statement Year 1 Year 2 Year 3 1: 66,000 2: 90,000 : 30,000 : 14,000