Question: Please help me figure out this problem: Problem 11-06 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line.

 Please help me figure out this problem: Problem 11-06 New-Project Analysis

Please help me figure out this problem:

The Campbell Company is considering adding a robotic paint sprayer to its

Problem 11-06 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,190,000, and it would cost another $19,000 to install it. The machine falls into the MACRS 3year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold aer 3 years for $518,000. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the rm $500,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%. a. What is the Year 0 net cash flow? $ 0 b. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar. Year 1 $ 0 0 $ m0 c. What is the additional Year 3 cash flow (i.e, the aftertax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar. $ 0 Year 2 d. If the project's cost of capital is 15 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ 0 Should the machine be purchased? -0

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