Question
In: Finance
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $970,000, and it would cost another $19,500 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 $647,000. The machine would require an increase in net working capital (inventory) of $11,500. The sprayer would not change revenues, but it is expected to save the firm $427,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%.
What is the Year 0 net cash flow?
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 $
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.
If the project's cost of capital is 10 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
Should the machine be purchased?
Come someone please help me!
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$940,000, and it would cost another $19,500 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $591,000. The MACRS rates for the first three
years are 0.3333, 0.4445, and 0.1481. The machine would require an
increase in net working capital (inventory) of $20,000. The sprayer
would not change revenues, but...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,030,000, and it would cost another $25,000 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $490,000. The MACRS rates for the first three
years are 0.3333, 0.4445, and 0.1481. The machine would require an
increase in net working capital (inventory) of $18,000. The sprayer
would not change revenues, but...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$850,000, and it would cost another $21,500 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 $532,000. The machine would require
an increase in net working capital (inventory) of $13,000. The
sprayer would not change revenues, but it is...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$950,000, and it would cost another $22,000 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $560,000. The MACRS rates for the first three
years are 0.3333, 0.4445, and 0.1481. The machine would require an
increase in net working capital (inventory) of $14,000. The sprayer
would not change revenues, but...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,150,000, and it would cost another $20,000 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 $580,000. The machine would require
an increase in net working capital (inventory) of $13,000. The
sprayer would not change revenues, but it is...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$850,000, and it would cost another $20,000 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $649,000. The MACRS rates for the first three
years are 0.3333, 0.4445, and 0.1481. The machine would require an
increase in net working capital (inventory) of $13,000. The sprayer
would not change revenues, but...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,060,000, 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 $526,000. The machine would require
an increase in net working capital (inventory) of $14,000. The
sprayer would not change revenues, but it is...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
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 $17,500 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 $628,000. The machine would require
an increase in net working capital (inventory) of $17,000. The
sprayer would not change revenues, but it is...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$930,000, and it would cost another $25,000 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 $571,000. The machine would require
an increase in net working capital (inventory) of $20,000. The
sprayer would not change revenues, but it is...
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$950,000, and it would cost another $23,500 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $548,000. The MACRS rates for the first three
years are 0.3333, 0.4445, and 0.1481. The machine would require an
increase in net working capital (inventory) of $16,000. The sprayer
would not change revenues, but...
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