Question: The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer s base price is 1 , 0 8 0

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayers base price is 1,080,000, and it would cost another22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for 605,000. The MACRS rates for the first 3 years are 0.3333,0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of15,500. The sprayer would not change revenues, but it is expected to save the firm 380,000 per year in before-tax operating costs, mainly labor. Campbells marginal tax rate is 35

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