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You must evaluate the purchase of a proposed spectrometer for the R & D department . The purchase price of the spectrometer including modifications is

You must evaluate the purchase of a proposed spectrometer for the R & D department . The purchase price of the spectrometer including modifications is $ 260,000, and the equipment will be fully depreciated at the time of purchase . The equipment would be sold after 3 years for $ 88,000. The equipment would require a $ 7,000 increase in net operating working capital ( spare parts inventory ). The project would have no effect on revenues , but it should save the firm $ 73,000 per year in before - tax labor costs . The firm's marginal federal - plus - state tax rate is 25%. a . What is the initial investment outlay for the spectrometer after bonus depreciation is considered , that is , what is the Year project cash flow ? Enter your answer as a positive value . Round your answer to the nearest dollar $ b . What are the project's annual cash flows in Years 1,2, and 3? Do not round intermediate calculations . Round your answers to the nearest dollar Year 1 : $ Year 2 : $ Year 3 : c . If the WACC is 12%, should the spectrometer be purchased ?-Select-

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