This is problem 12-8 on page 429 of your text: You must evaluate the purchase of a spectrometer for the R&D department. The base price is $140,000, and it would cost another $30,000 to modify the equpment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $60,000. The applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in Appendix 12A. The equipment would require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $50,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. The firm's WACC ("hurdle rate" or "required rate of return") is 12% Question 4 (1 point) Given the information in the problem: What is the project's annual cash flow for year 2? $50,000 ($15.900) $52,440 $60,600 Question 5 (1 point) Given the information in the problem: What is the project's incremental depreciation (depreciation expense) for year 3? ($140,000) ($56,100) $113,900 ($25,500) Question 6 (1 point) Given the information in the problem: What is the project's operating cash flow for year 3? (Do not include the terminal cash flows.) $50,000 $14,700 $40,200 $88,960 Question 7 (1 point) Given the information in the problem: Sale of equipment: What is the project's cash flow from the sale of the equipment in year 3? $60,000 $48,760 $28,800 $40,760