You must evaluate a proposal to buy a new milling machine. The purchase price of the milling machine, including shipping and installation costs, is $143,000, and the equipment will be fully depreciated at the time of purchase. The machine would be sold after 3 years for $94,500. The machine would require a $5,000 increase in net operating working capital (increased inventory less increased accounts payable). There would be no effect on revenues, but pretax labor costs would decline by $52,000 per year. The marginal tax rate is 25%, and the WACC is 8%. 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 handled? 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 0 project cash flow? c. What are the projects annual cash flows during Years 1, 2, and 3? d. Should the machine be purchased? Explain your answer.

Specifically, show the excel inputs to obtain the NPV in part d.