Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $900,000, and it would

image text in transcribed
New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $900,000, and it would cost another $18,500 to install it. The machine falls into the MACRS 3-year class (the applicable MAORS depreciation rates are 33.33%, 44.45%, 14.81%, and 7,41%), and it would be sold after 3 years for $603,000. The machine would require an increase in nat working capital (inventory) of $17,500. The sprayer would not change revenues, but it is expected to save the firm $398,000 per year in before tax operating costs, mainly tabor. Campbell's marginal tax rate is 35%. 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 3:5 Year 2:5 Year 3:5 c. What is the additional Year 3 cash flow (le, the after-tax savage and the return of working capital? $ 4. If the project's cost of capital is 10 %, what is the NPV of the project? $ Should the machine be purchased

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Calculus And Its Applications

Authors: Larry Goldstein, David Lay, David Schneider, Nakhle Asmar

14th Edition

0134437772, 9780134437774

Students also viewed these Finance questions

Question

=+d) Perform the ANOVA and report your conclusions.

Answered: 1 week ago