Part 1. ABC Company is considering whether a project requiring the purchase of new equipment worth investing. The firm spent $20,000 three months ago to conduct market study. The cost of a new machine is $160,000, and the firm has to spend additional $10,000 to get it shipped and installed. This project will increase annual revenues by $225,000 and annual costs by $45,000. If the firm undertakes this project, $50,000 in net working capital investment is required. What is the initial outlay of this project? Round to the nearest penny. Do not include a dollar sign in your answer. Type the absolute value of the answer. (i.e. If your answer is -$20,000 since it is cost to replace, type 20000 as your answer.)

Part 2- The cost of new machine is $220,000. The cost of shipping is $10,000 and of installation is $20,000. The required working capital is $25,000. Using the 3-year MACRS schedule, determine the depreciation expense in year 1. Round to the nearest penny. Do not include a dollar sign.

Year 3-YR MACRS

1. 33.33%

2 44.45%

3 14.81%

4 7.41%