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You must evaluate a proposal to buy a new milling machine. The purchase price of the mining machine, including shipping and instincts, 5127.000, and the equipment will be fully deprecated at the time of purchase. The machine would be solder years for $7,000 The machine would require a $7,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be effect on revenue, but prea who couts would decline by 552,000 per year. The marginal tax rate is 25%, and the WACC 114. Also, the firm spent $4.500 last year investigating the festivity using the machine a. How should the $4.500 spent last year behandled 1. Only the tax effect of the research expenses should be included in the analysis 11. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the projects ince, it should not be included in the initial investment outlay 11. Last year's expenditure is considered an opportunity cost and does not represent an incremental cash now. Hence, it should not be included in the analysis 1. 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 analyse V. The cost of research is an incremental cash flow and should be included in the analysis -Select b. What is the initial investment outlay for the machine for capital budgeting purposes after the 100% bonus depreciation is considered that is what is the Year O project cash now? Enter your answer as a positive value. Round your answer to the nearest dollar c. What are the project's annual cash flows during Years 1, 2, and I do not round Intermediate cakulations. Round your answers to the nearest dotar. Year 1:5 Year 21 Years d. Should the machine be purchased? -Select