You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is $$90,000,$ and it would cost another $$18,000$ to modify the equipment for special use by the firm. The equipment falls into the MACRS $3-$year class and would be sold after $3$ years for $$27,000.$ The applicable depreciation rates are $33\%,45\%,15\%,$ and $7\%.$ The equipment would require an $$5,000$ increase in net operating working capital $($spare parts inventory$).$ The project would have no effect on revenues, but it should save the firm $$41,000$ per year in before$-$tax labor costs. The firm's marginal federal$-$plus$-$state tax rate is $40\%.$ The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

a$.$ What is the initial investment outlay for the spectrometer, that is$,$ what is the Year $0$ project cash flow? Round your answer to the nearest cent. Negative amount should be indicated by a minus sign.

$

b$.$ What are the project's annual cash flows in Years $1,2,$ and $3?$ Round your answers to the nearest cent.

In Year $1$$

In Year $2$$

In Year $3$$$,37,231\mathrm{.}20Q$

c$.$ If the WACC is $13\%,$ should the spectrometer be purchased?