The president of your company, MorChuck Enterprises, has asked you to evaluate the proposed acquisition of a new chromat

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The president of your company, MorChuck Enterprises, has askedyou to evaluate the proposed acquisition of a new chromatograph forthe firm's R&D department. The equipment's basic price is$73,000, and it would cost another $14,500 to modify it for specialuse by your firm. The chromatograph, which falls into the MACRS3-year class, would be sold after 3 years for $34,500. The MACRSrates for the first three years are 0.3333, 0.4445 and 0.1481.(Ignore the half-year convention for the straight-line method.) Useof the equipment would require an increase in net working capital(spare parts inventory) of $2,720. The machine would have no effecton revenues, but it is expected to save the firm $21,700 per yearin before-tax operating costs, mainly labor. The firm's marginalfederal-plus-state tax rate is 25%. Cash outflows and negative NPVvalue, if any, should be indicated by a minus sign. Do not roundintermediate calculations. Round your answers to the nearestdollar.
What is the Year-0 net cash flow?
$
What are the net operating cash flows in Years 1, 2, and 3?(Note: Do not include recovery of NWC or salvage value inYear 3's calculation here.)
What is the additional (nonoperating) cash flow in Year 3?
$
If the project's cost of capital is 10%, what is the NPV of theproject?
$
Should the chromatograph be purchased?
-Select-YesNo