You are asked to evaluate the proposed purchase of a new machine. The machine costs $40,000 and would require an increase in net operating working capital of $2,000 at the time of purchase. The machine would increase the firm's revenues by $20,000 per year but would also increase operating costs by $5,000 per year. It is expected to be used for three years and then be sold for $21,000. The firm's marginal tax rate is 40%. (The annual depreciation rates over the next four years are 33%, 45%, 15%, and 7% respectively.) What is the net investment required at t = 0? 1) $42,000 2) $40,000 3) $38,600 4) $37,600 What is the operating cash flow in Year 3? 1) $11,520 2) $9,520 O ) 3) $9,400 4) $11,400 What is the net salvage value in the terminal year (Year 3)? 1) $12,600 2) $13,720 3) $15,450 4) $21,000 What is the terminal year's non-operating cash flows (Year 3)? 1) $15,720 2) $14,600 3) $12,000 4) $10,500