You must evaluate a propocal to buy a now maling machine. The purchase price of the milling machine, including shipping and installation costs, is. 5174,000 , and the equipment will be fully deprecated at the time of purchase. The machine would be sold after 3 years for $47,000. The machine would reguire a $3,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decine by 546,000 per vear. The marginal tax rate is 25%, and the wacc is 10%. Also, the firm spent $4,500 last year investigating the feasibility of using the machine. a. How should the $4,500 spent last year be handied? 1. The cost of research is an linciemental cash flow and should be induded in the analysis. II. Only the tax effect of the research expenses should be included in the analysis. iil. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the profect's life. Hence, it should not be included in the initial investment outlay. IV. Last year's expenditure is considered an opportunity cost and does not represent an insremental cash flow. Hence. It should not be included in the analysis. V. Last year's expenditure is considered a sunk cost and does not represent an incremental cast flon. Hence. It should not be included in the analysis. b. What is the initial investment outlay for the machine for capital budgeting ourposes after the toons bonus depreciation is considered, that is, what is the Year oproject cash flow? Enser your answer as a positive value. Round your answer to the nearect dollati 4. c. What are the brolects annual cash flows during Years 1,2, and 3? Do not round intermediate calculacions, Round your answers to the nearest dollar. Year 1:5 Year 2:5 Year 3: 3 4. Should the machine be purchased