$(25$ points$).$ Real Imaginery is evaluating the purchase of a proposed spectrometer for the R$(25$ points$).$ Real Imaginery is evaluating the purchase of a proposed spectrometer for the R

$(25$ points$).$ Real Imaginery is evaluating the purchase of a proposed spectrometer for the R&D department. The base price is $$140,000,$ and it would cost another $$30,000$ 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 $$60,000.$ The applicable depreciation rates are $33\%,45\%,15\%,$ and $7\%.$ The equipment would require an $$8,000$ increase in net operating working capital $($spare parts inventory$).$ The project would have no effect on revenues, but it should save the firm $$50,000$ 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?

b$.$ What are the project's annual cash flows in Years $1,2,$ and $3?$

c$.$ If the WACC is $9\%,$ should the spectrometer be purchased? Explain.