please show all work and how you reached the answer! please highlight answers as well. if you use excel please show formulas used

3. The president of your company, ChuckERat Enterprises, has asked you to evaluate the proposed development of a new series of loud, mind-numbing, arcade-style games by the firm's R&D department. The new machinery needed for development has a base price of $125,000, and it would cost another $25,000 to modify it for special use by your firm. The new machinery, would fall into the MACRS 3-year class and would be sold after 3 years for $40,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. Use of the machinery would require an increase in net working capital (spare parts inventory) of $10,000. The machine would increase revenues by $68,000 each of the next three years and would not impact operating expenses. The firm's marginal tax rate is 25%. a. What is the Year-O cash flow? What are the cash flows in Years 1, 2, and 3 (specifically show the additional, nonoperating costs that come in the final year, year 3)? b. If the project's cost of capital is 8%, should the machinery be purchased? Explain/show why or why not. Hint: You can begin your Years 1-3 cash flow calculations by subtracting appropriate depreciation amounts from $68,000 in each year. (12)