You must evaluate the purchase of a proposed spectrometer for the R\&D department. The base price is $80,000, and it would cost another $20,000 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 $20,000. The applicable depreciation rates are 33%,45%,15%, and 7%. The equipment would require an $10,000 increase in net operating working capital (spare parts inventory). The project would have no effect revenues, but it should save the firm $74,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. a. 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 th nearest cent. $ 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 cent. Year 1: \$ Year 2: \$ Year 3: \$ c. If the WACC is 11%, should the spectrometer be purchased? Hide Feedback