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25 16 17 New-Project Analysis The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm's RAD department. The equipment's basic price is $77,000, and it would cost another $19,500 to modify it for special use by your firm. The chromatographs, which falls into the MACRS 3-year class, would be sold after 3 years for $35,600. The MACRS rates for the first 3 years are 0.3333, 0.4445 and 0.1481. Use of the equipment would require an increase in net working capital (spare parts inventory) of $4,420. The machine would have no effect on revenues, but it is expected to save the form $22,900 per year in before-tax operating costs, mainly tabor. The firm's marginal federal-plus-state tax rate is 40% Cash outflows and negative NPV value, any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar A2 18 19 0 2. What is the Year net cash flow? - 5 b. What are the net operating cash flows in Years 1, 2, and 37 Do not include recovery of NWC or salvage value in Year 3's calculation here Year 1: $ Year 2: $ Year 3: $ c. What is the additional cash flow in Year 3 from NWC and salvage? $ d. If the project's cost of capital is 11%, what is the NPV of the project? $ Should the chromatograph be purchased? -Select

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