The president of the company you work for has asked you to evaluate the proposed acquisition...

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The president of the company you work for has asked you toevaluate the proposed acquisition of a new chromatograph for thefirm’s R&D department. The equipment's basic price is $180,000,and it would cost another $45,000 to modify it for special use byyour firm. The chromatograph, which falls into the MACRS 3-yearclass, would be sold after 3 years for $63,000. The MACRS rates forthe first 3 years are 0.3333, 0.4445 and 0.1481. Use of theequipment would require an increase in net working capital (spareparts inventory) of $10,800. The machine would have no effect onrevenues, but it is expected to save the firm $54,000 per year inbefore-tax operating costs, mainly labor. The firm's marginalfederal-plus-state tax rate is 35%.
What is the Year 0 net cash flow? If the answer is negative,use parentheses.
$
What are the net operating cash flows in Years 1, 2, and 3? Donot round intermediate calculations. Round your answers to thenearest dollar.
Year 1 $
Year 2 $
Year 3 $
What is the additional (nonoperating) cash flow in Year 3? Donot round intermediate calculations. Round your answer to thenearest dollar.
$
If the project's cost of capital is 12%, should thechromatograph be purchased?
-Yes or No

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The president of the company you work for has asked you toevaluate the proposed acquisition of a new chromatograph for thefirm’s R&D department. The equipment's basic price is $180,000,and it would cost another $45,000 to modify it for special use byyour firm. The chromatograph, which falls into the MACRS 3-yearclass, would be sold after 3 years for $63,000. The MACRS rates forthe first 3 years are 0.3333, 0.4445 and 0.1481. Use of theequipment would require an increase in net working capital (spareparts inventory) of $10,800. The machine would have no effect onrevenues, but it is expected to save the firm $54,000 per year inbefore-tax operating costs, mainly labor. The firm's marginalfederal-plus-state tax rate is 35%.What is the Year 0 net cash flow? If the answer is negative,use parentheses.$What are the net operating cash flows in Years 1, 2, and 3? Donot round intermediate calculations. Round your answers to thenearest dollar.Year 1$Year 2$Year 3$What is the additional (nonoperating) cash flow in Year 3? Donot round intermediate calculations. Round your answer to thenearest dollar.$If the project's cost of capital is 12%, should thechromatograph be purchased?-Yes or No