You must evaluate a proposal to buy a new milling machine. The puichast price of the miling machine, induding shipping and installation costu, is tro4,oria, and the equipment will be fully depredated at the time of purchase, The machine would be sold after 3 years for 341,000 . The machine would renulier a 57 , 004 increar in net operating working capital (increased inventory less increased accounts payable). There nould be no effect on revenues, but pretax labar ecots weili decine by $56,000 per year. The marainal tax rate is 25\%, and the WACC is 12%. Alse, the firm spent $4,500 fast year imvestigating the feasibalty of uaing the machine a. How should the $4,500 spent last year be handled? 1. The cost of research is an incremental cash flow and should be induded in the analysis. II. Only the tax effect of the research expenses ahould be induded in the analyrisi. III. Last year's expenditure should be treated as a terminal cash flow and dealt with at the end of the project's life. Hence, if shouid noc be inciuded in the iritial investment outlay. IN. Last year's expenditure is considered an opportunity cost and does not represent an incremental cash flow, Hence, it should not be indulied in it analysis. V. Last year's expenditure is considered a mank cost and ooes not rebresent an incremental cash flow. Hence. it should not be induded in thik analysis. b. What is the initial investment outlay for the machine for capital budgeting purpeses after the 100 coc benus depreciabion is convidervd, that is, what is the Year 0 orolect cash flow? Enter your answer as a positive value. Round your anwwer to the neareat dollar: c. What are the nrolect's annual cash flows during Years 1, 2, and 37 Do not round intermediate calculations. found your ansistry te the neareit dellar. Year 1:$ Year 2 : 1 Year 3 : $ d. chnuld the machine be purchased