The chung chemical corporation is considering the purchase of a chemical analysis machine. although the machine being considered will result in an increase in earnings before interest and taxes of $36,000 per year, it has a purchase price of $180,000 and it would cost an additional $5,000 to properly install the machine. In addition, to properly operate the machine, inventory must be incresed by $9,000. This machine has an expected life of 10 years, after which it will have no salvage value. also, assume simplified straight-line depreciation and that this machine is being depreciated down to zero, a 36 percent marginal tax rate, and a required rate of return of 13 percent.

a. what is the initial outlay associated with this project?

b. what are the annual after-tax cash flows associated with this project for years 1 through 9?

c. what is the terminal cash flow in year 10 ( what is the annual after-tax cash flow in year 10 plus any additional cash flows associated with the termination of the project)?

d. should this machine be purchased?