You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price...

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You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $290,000, and it wouldcost another $72,500 to modify the equipment for special use by thefirm. The equipment falls into the MACRS 3-year class and would besold after 3 years for $101,500. The applicable depreciation ratesare 33%, 45%, 15%, and 7%. The equipment would require a $15,000increase in net operating working capital (spare parts inventory).The project would have no effect on revenues, but it should savethe firm $60,000 per year in before-tax labor costs. The firm'smarginal federal-plus-state tax rate is 40%. What is the initialinvestment outlay for the spectrometer, that is, what is the Year 0project cash flow? Round your answer to the nearest cent. Negativeamount should be indicated by a minus sign. $ What are theproject's annual cash flows in Years 1, 2, and 3? Round youranswers to the nearest cent. In Year 1 $ In Year 2 $ In Year 3 $ Ifthe WACC is 14%, should the spectrometer be purchased?

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You must evaluate the purchase of a proposed spectrometer forthe R&D department. The base price is $290,000, and it wouldcost another $72,500 to modify the equipment for special use by thefirm. The equipment falls into the MACRS 3-year class and would besold after 3 years for $101,500. The applicable depreciation ratesare 33%, 45%, 15%, and 7%. The equipment would require a $15,000increase in net operating working capital (spare parts inventory).The project would have no effect on revenues, but it should savethe firm $60,000 per year in before-tax labor costs. The firm'smarginal federal-plus-state tax rate is 40%. What is the initialinvestment outlay for the spectrometer, that is, what is the Year 0project cash flow? Round your answer to the nearest cent. Negativeamount should be indicated by a minus sign. $ What are theproject's annual cash flows in Years 1, 2, and 3? Round youranswers to the nearest cent. In Year 1 $ In Year 2 $ In Year 3 $ Ifthe WACC is 14%, should the spectrometer be purchased?