What is the initial investment outlay for the spectrometer, that is, what is the Year o project cash flow? O-$11,900 -$11,800 -$11,000 0-$11,100 -$10,300 You must evaluate the purchase of a spectrometer for the R&D department. The base price is $11,000, and it would cost another $100 to modify the equipment for special use by the firm. The equipment falls into the MACRS 3-year class and would be sold after 3 years for $1,650. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an $800 increase in net operating working capital. The project would have no effect on revenues, but it should save the firm $6,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 40%. Page 5 of 11 Previous Page Next Page