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New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line....

New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $980,000, and it would cost another $23,500 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 $531,000. The machine would require an increase in net working capital (inventory) of $9,000. The sprayer would not change revenues, but it is expected to save the firm $461,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%.

  1. What is the Year 0 net cash flow?
    $ ???



  5. 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 $
    Year 2 $
    Year 3 $

  7. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.
    $ ???


  10. If the project's cost of capital is 14 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
    $ ???

    Should the machine be purchased?
    -Select-YesNo

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