Question: New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's bate price is $990,000, and it
New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's bate price is $990,000, and it would cost another $23,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33,33%, 44.45%, 14.8%, and 7.41%), and it would be sold atter 3 years for $569,000. The machine would require an increase in net working capital inventory) of $19,500. The sprayer would not change revenues, but it is expected to save the firm 3430,000 per year in before tax operating costs, mainly labor, Campbell's marginal tax rate is 40%. Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dolls 2. What is the Year-net cash flow? 3 b. What are the net operating cash flows in Years 1, 2, and Year 1: Year 25 Year C. What is the additional Year 3 canh How the after tax salvage and the return of working capital d. If the project's cost of capital is 10% what is the NPV of the project> 5 Should the machine be purchased
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