Question
Hello! Having trouble with the formula, can someone please write out the formula or show me how to calculate in Excel? Thanks! The Campbell Company
Hello! Having trouble with the formula, can someone please write out the formula or show me how to calculate in Excel? Thanks!
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 $18,000 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 $589,000. The machine would require an increase in net working capital (inventory) of $16,500. The sprayer would not change revenues, but it is expected to save the firm $491,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%.
- 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 13 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should the machine be purchased?
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