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 1 (1 point) Given the information this problem: What is the initial investment outlay for the project? That is, what is the Year 0 project cash flow? ($30,000) ($140,000) O($178,000) ($170,000) Question 2 (1 point) Given the information in the problem: What is the project's incremental depreciation (depreciation expense) for year 1? ($140,000) ($56,100) $113,900 ($25,500) Question 3 (1 point) Given the information in the problem: What is the project's annual cash flow for year 1? $50,000 ($3,660) $52,440 $56,100