# You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is \$130,000, and it would cost another \$19,500 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 \$45,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an \$15,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm \$72,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%. What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest cent.Year 1: \$

Question

You must evaluate the purchase of a proposed spectrometer for the R&D department. The base price is \$130,000, and it would cost another \$19,500 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 \$45,500. The applicable depreciation rates are 33%, 45%, 15%, and 7%. The equipment would require an \$15,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm \$72,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 35%.

What are the project's annual cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest cent.
Year 1: \$