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Business, 19.08.2020 01:01 hunterkerlin20p3l6ff

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,090,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $627,000. The machine would require an increase in net working capital (inventory) of $16,500. The sprayer would not change revenues, but it is expected to save the firm $430,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%. Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. a. What is the Year-0 net cash flow?
$
b. What are the net operating cash flows in Years 1, 2, and 3?
Year 1: $
Year 2: $
Year 3: $
c. What is the additional Year 3 cash flow (i. e, the after-tax salvage and the return of working capital)?
$
d. If the project's cost of capital is 13 %, what is the NPV of the project?
$
Should the machine be purchased?
a. Yes
b. No

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The Campbell Company is considering adding a robotic paint sprayer to its production line. The spray...

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