You must evaluate a proposal to buy a new malling machine. The purchase price of the milling machine, including shipping and installation costs, in 5122 , oco, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $46,000, The machine would require is $3,500. increise in net operating worlong capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by 5.14,000 per a. How should the $4,500 spent last year be handled? 1. Last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow. Hence, it should not be induded in the analysis. II. Last year's expendture is considered a sunk cost and does not represent an incremental cash flow. Hence, it should not be induded in the analysis. III. The cost of research is an incremenal cosh flow and should be included in the analysis. V. Only the tax effect of the researdy expenses should be induded in the analysis. V. Last year's expengture should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, it should not be induded in the initial investment outlary: b. What is the intas invesement outlay for the machine for capieal budgetine purposes after the 100% bonas depreciation is considered, that is. what is the Year 0 project cashillow? telter. vour answer as a positive walue. Pound your answer to the nearest dollar. 5 c. What are the prosect's annual cash flows during rears 1,7 , and ar Do not round intermedate caloulations. Round your anwern to the nearest daillai. Ynar ils Year 2i: 3 Year 3:5 4. Shoudd the maduine be purchaised