Problem A$-21($Algo$)$ Sensitivity Analysis in Capital Investment Decisions

Green & Company is considering investing in a robotics manufacturing line. Installation of the line will cost an estimated $$15\mathrm{.}8$ million. This amount must be paid immediately even though construction will take three years to complete $($years $0,1,$ and $2).$ Year $3$ will be spent testing the production line and, hence, it will not yield any positive cash flows. If the operation is very successful, the company can expect after$-$tax cash savings of $$10\mathrm{.}8$ million per year in each of years $4$ through $7.$ After reviewing the use of these systems with the management of other companies, Green$$s controller has concluded that the operation will most probably result in annual savings of $$8\mathrm{.}0$ million per year for each of years $4$ through $7.$ However, it is entirely possible that the savings could be as low as $$3\mathrm{.}8$ million per year for each of years $4$ through $7.$ The company uses a $12$ percent discount rate. Use Exhibit A$\mathrm{.}8.$

Required:

Compute the NPV under the three scenarios.

Note: Round PV factor to $3$ decimal places. Enter your answers in thousands of dollars, rounded to the nearest whole number. Negative amounts should be indicated by a minus sign.