Question: New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $930,000, and it
New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $930,000, and it would cost another $18,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 4445%, 14.81%, and 741%), and it would be sold after 3 years for $639,000. The machine would require an increase in net working capital inventory) of $13,500. The sprayer would not change revenues, but it is expected to save the firm $419,000 per year in before tax operating costs, mainly labor. Campbell's marginal tax rate is 10% 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 o net cash flow? $ b. What are the net operating cash flows in Years 1, 2, and 3? Year 1: Year 25 Year 3:5 c. What is the additional Year 3 cash flow (le, the after-tax salvage and the return of working capital) 5 d. If the project's cost of capital is 12 %, what is the NPV of the project? $ Should the machine be purchased? -Select
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