ellook You must alates proposal to buy a new miling machine. The base price is $111,000, and shipping and installation costs would add another $11,000. The machine falls into the MACRS 3 year dass, and it would be woter 3 years for $61,050. The applicable depreciation rates are 33%, 45%, 15% and 7%. The machine would require a $5,500 increase in net operating working capital (increased ventory less increased counts payable). There would be no effect on revenues, but preta labor costs would decine by $57,000 per year. The marginal tax rate is 35%, and the WACC Is 10%. No, the firm spent $4,500 last year wivestigating the feasibility of using the machine How should the $4,500 spent last year be handled? LOnly the tax effect of the research expenses should be included in the analysis IL Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's We. Hence, it should not be induded in the ninal investment outlay II. Last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, should not be included in the analysis IV. Last year's expenditure is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis . The cost of research is an incremental cash flow and should be included in the analysis h. What is the real vestment outley for the machine for capital budgeting purposes, that is what is the Year O project cash flow? Enter your answer as a positive value. Round your answer to the nearest.com What are the project's cash rows during Years 1, 2, and 3? Do not round intermediate calculations, Round your answers to the nearest cent. Yer 2.5 4. Should the machine be purchased