New$-$Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $$1,010,000,$ and it would cost another $$21,500$ to install it$.$ The machine falls into the MACRS $3-$year class $($the applicable MACRS depreciation rates are $33\mathrm{.}33\%,44\mathrm{.}45\%,14\mathrm{.}81\%,$ and $7\mathrm{.}41\%),$ and it would be sold after $3$ years for $$585,000.$ The machine would require an increase in net working capital $($inventory$)$ of $$19,500.$ The sprayer would not change revenues, but it is expected to save the firm $$371,000$ per year in beforetax operating costs, mainly labor. Campbell's marginal tax rate is $35\%.$

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

b$.$ 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 $1s$

$

Year $3$

c$.$ 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. $ $$

d$.$ If the project's cost of capttal 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?