New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line The sprayer's base price is $880,000, and it would cost another $24,500 to install it The machine falls into the MACRS 3 year class, and it would be sold after 3 years for $559,000 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 $13,500 The sprayer would not change revenues, but it is expected to save the firm $332,000 per year in before tax operating costs, mainly labor Campbell's marginal tax rate is 25 (Ignore the half year convention for the straight line method ) Cash outflows, if any, should be indicated by a minus sign Do not round intermediate calculations Round your answers to the nearest dollar What is the Year 0 net cash flow $ What are the net operating cash flows in Years 1, 2, and 3 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) $ If the project's cost of capital is 11 , what is the NPV of the project $ Should the machine be purchased Yes or No New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line The sprayer's base price $880,000, and it would cost another $24,500 to install it The machine falls into the MACRS 3 year class, and it would be sold after 3 years for $559,000 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 $13,500 The sprayer would not change revenues, but it is expected to save the firm $332,000 per year in before tax operating costs, mainly labor Campbell's marginal tax rate is 25 (Ignore the half year convention for the straight line method ) Cash outflows, if any, should be indicated by a minus sign Do not round intermediate calculations Round your answers to the nearest dollar a What is the Year O net cash flow $ b What are the net operating cash flows in Years 1, 2, and 3 Year 1 Year 2 5 Year 3 5 c What is the additional Year 3 cash flow (i e, the after tax salvage and the return of working capital) d If the project's cost of capital is 11 , what is the NPV of the project $ Should the machine be purchased Select

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New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $880,000, and it would

New-Project Analysis

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $880,000, and it would cost another $24,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $559,000. 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 $13,500. The sprayer would not change revenues, but it is expected to save the firm $332,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.

What is the Year-0 net cash flow?

$ ??
What are the net operating cash flows in Years 1, 2, and 3?

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)?

$ ??
If the project's cost of capital is 11%, what is the NPV of the project?

$ ??

Should the machine be purchased?

-Yes or No?

New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price $880,000, and it would cost another $24,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $559,000. 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 $13,500. The sprayer would not change revenues, but it is expected to save the firm $332,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. a. What is the Year-O net cash flow? $ b. What are the net operating cash flows in Years 1, 2, and 3? Year 1: Year 2:5 Year 3:5 c. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)? d. If the project's cost of capital is 11%, what is the NPV of the project? $ Should the machine be purchased? -Select