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 $1,140,000, and it would cost another $24,000 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 $618,000. The machine would require an increase in net working capital (inventory) of $17,500. The sprayer would not change revenues, but it is expected to save the firm $442,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%.

Problem 11-06 New-Project Analysis The Camphell Company is cansidering adding a rahotic pa int sprayer ta its produrtion line. The sprayer's hase pric is S1,140,000, and it wauld cost anather $24,00 ta install it. The marhin falls into the MACRS 3-year dass (the applicable MACRS depreciation rates are 33.33% 44.45 14.81% and 7.41% and it ould be sold arter 3 years for s618 000. The mechine would require an increase in net working capital inventory of $17,500. The sprayer would not change revenues, but it is expected to save the firm t442,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%. a. What is the Year D net cash flow? b. What are the net operating cash nows in Years 1, 2, and 3? Do nat round intermediate calculations. Round your answers to the nearest dollar. Year 1 Year 2 Year 3 c. What is the additional Year 3 cash flow .e, the after-tex salvage and the returm of warking capita) Do nat raund intermediate calculations. Round your answer to the nearest dollar (i.e, the after-tax salvage and the return of d. If the project's cost of capital is 10 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer tote nearest dolar Should the machin be purchased