7. Problem 12.00 (New Project Analys!) book You must evaluate a proposal to buy a new miling machine. The purchate price of the miling machine, Induding shipping and won costs, $120.000, and the equipment will be deprecated at the time of purchase. The machine would be soldater 3 years for $40,000. The machine would require an 1,000 increase in net operating working capital increased inventory loss increased accounts payable). There would be no effect on events, but relax labor costs would decine by $3.000 per year. The marginal tax rate is 2, and the WACC i 12%. Also, the firm spent $4,500 last year investing the fastity of using the machine How should the 4.500 entstar te hanted! 1. Last years expenditures cordered a sun cost and does not represent an incrementa ca o Hence, uld ret be included in the anal II. The cost of research is an incrementat ca fow and should be induced in the ralysis m. Only the effect of the researchers should be cutest in the IV Last year's pure would be treatminal cash flow and deal with the end of the projecte. Hence, hould not be included in the water investment Want years expenditures de sportunity cost and does not represent an incremental concetto not be included in the analys What is the one they for the machine wal budget purposes het 100% boradores considered, it is not in the worst hower your answers poteva Hound your write newest dolar Who are the projects and can now during yours 1,2, me Donat round emade com round your answers to the rear color Year Year 21 Shout the chint be purchased Set 7. Problem 12.09 (New Project Analy) You must evaluate a proposal to buy a new miling machine. The purchase price of the milling machine, including shipping and installation costs $120,000, and the equipment will be fully deprecated at the time of purchase. The machine would be soldater 3 years for $40,000. The machine would regurean 58.000 increase in net operating working capital increased inventory less increased accounts payable. There would be no effect on revenues, but relax labor costs would decline by $33.000 per year. The marginal tax rate is 25%, and the WACC I 124. Also, the firm spent $4.500 last year investigating the feasibility of using the machine # How should the $4,500 spent last year behandled? 1. Last year's expenditure is considered a wink cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis II. The cost of research is an incremental cash flow and should be duded in the analysis. m. Only the tax effect of the research expenses should be included in the analysis IV. Last years expenditure should be treated as terminal cash flow and dealt with at the end of the projecte. Hence, it should not be included in the initial investment way Last year's editure is considered an opportunity cost and does not represent an incremental cash flow. Hence, it should not be included in the analysis -Set What's the tal westment outlay for the machine for capital Budgeting purposes after the 100% bonus depreciation is considered, that is, what is the Year project and flow? Enter your answer as positive value. Round your answer to the nearest c What are the project's annual cash flow during Years 1, 2, and J? Do not round intermediate calculations. Round your answers to the nearest dolar Years Year 2:5 Year 3.5 d. Should the machine be purchased? Selet