NEW PROJECT ANALYSIS You must evaluate a proposal to buy a new milling machine. The base price...

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NEW PROJECT ANALYSIS
You must evaluate a proposal to buy a new milling machine. Thebase price is $145,000, and shipping and installation costs wouldadd another $6,000. The machine falls into the MACRS 3-year class,and it would be sold after 3 years for $94,250. The applicabledepreciation rates are 33%, 45%, 15%, and 7%. The machine wouldrequire a $5,500 increase in net operating working capital(increased inventory less increased accounts payable). There wouldbe no effect on revenues, but pretax labor costs would decline by$37,000 per year. The marginal tax rate is 35%, and the WACC is12%. Also, the firm spent $5,000 last year investigating thefeasibility of using the machine.
What is the initial investment outlay for the machine forcapital budgeting purposes, that is, what is the Year 0 projectcash flow? Round your answer to the nearest cent.
$
What are the project's annual cash flows during Years 1, 2, and3? Round your answer to the nearest cent. Do not round yourintermediate calculations.

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NEW PROJECT ANALYSISYou must evaluate a proposal to buy a new milling machine. Thebase price is $145,000, and shipping and installation costs wouldadd another $6,000. The machine falls into the MACRS 3-year class,and it would be sold after 3 years for $94,250. The applicabledepreciation rates are 33%, 45%, 15%, and 7%. The machine wouldrequire a $5,500 increase in net operating working capital(increased inventory less increased accounts payable). There wouldbe no effect on revenues, but pretax labor costs would decline by$37,000 per year. The marginal tax rate is 35%, and the WACC is12%. Also, the firm spent $5,000 last year investigating thefeasibility of using the machine.What is the initial investment outlay for the machine forcapital budgeting purposes, that is, what is the Year 0 projectcash flow? Round your answer to the nearest cent.$What are the project's annual cash flows during Years 1, 2, and3? Round your answer to the nearest cent. Do not round yourintermediate calculations.