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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 $900,000, 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 $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
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