You must evaluate a proposal to buy a new milling machine. the base price is $135,000, and shipping and installation costs would add another $8,000. the machine falls into the macrs 3-year class, and it would be sold after 3 years for $94,500. the applicable depreciation rates are 33%, 45%, 15%, and 7% as discussed in appendix 12a. the machine would require a $5,000 increase in net operating working revenues, but pretax labor costs would decline by $52,000 per year. the marginal tax rate is 35% and the wacc is 8%. also, the firm spent $4,500 last year investigating the feasibility of using the machine.

a. how should the $4,500 spend last year be handled?

b. what is the initial investment outlay for the machine for capital budgeting purposes, that is, what is the year 0 project cash flow?

c. what are the project’s annual cash flows during years 1, 2, and 3?

d. should the machine be purchased? explain your answer.

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Balance sheet the assets of dallas & associates consist entirely of current assets and net plant and equipment. the firm has total assets of $2 5 million and net plant and equipment equals $2 million. it has notes payable of $150,000, long-term debt of $750,000, and total common equity of $1 5 million. the firm does have accounts payable and accruals on its balance sheet. the firm only finances with debt and common equity, so it has no preferred stock on its balance sheet. a. what is the company's total debt? b. what is the amount of total liabilities and equity that appears on the firm's balance sheet? c. what is the balance of current assets on the firm's balance sheet? d. what is the balance of current liabilities on the firm's balance sheet? e. what is the amount of accounts payable and accruals on its balance sheet? [hint: consider this as a single line item on the firm's balance sheet.] f. what is the firm's net working capital? g. what is the firm's net operating working capital? h. what is the explanation for the difference in your answers to parts f and g?