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Problem 11-6 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer.........ONLY -->D-part is wrong; please someone help me to get correct answer;
Problem 11-6 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer.........ONLY -->D-part is wrong; please someone help me to get correct answer; I am posting this question 2nd time to get correct answer.
Problem 11-6 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $870,000, and it would cost another $17,500 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 $535,000 The machine would require an increase in net working capital (inventory of $14,500 The sprayer would not change revenues, but it is expected to save the firm $421,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35% a. What is the Year-0 net cash flow? $9 90200 b. What are the net operating cash flows in Years 1, 2, and 3? Round your answers to the nearest dollar. Year 1 $37718 $41172 $31965 Year 2 Year 3 c. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)? Round your answer to the nearest dollar. $38526:C d. If the project's cost of capital is 14 %, what is the NPV of the project? Round your answer to the nearest dollar $24075 Should the machine be purchased? YesStep by Step Solution
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