You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is $110,000, and the equipment will be fully depreciated at the time of purchase. The equipment would be sold after 3 years for $55,000. The equipment would require a $13,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $54,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 25%.

1. What is the initial investment outlay for the spectrometer, that is, what is the Year 0 project cash flow? Enter your answer as a positive value. Round your answer to the nearest dollar. $ 123,000 is incorrect

2. 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: $40,500 is correct Year 2: $40,500 is correct Year 3: $

have no effect on revenues, but it should save the firm $54,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 25%. $ 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