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Problem A-18 (Algo) Sensitivity Analysis in Capital Investment Decisions Square Manufacturing is considering investing in a robotics manufacturing line. Installation of the line will cost

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Problem A-18 (Algo) Sensitivity Analysis in Capital Investment Decisions Square Manufacturing is considering investing in a robotics manufacturing line. Installation of the line will cost an estimated $10.6 million. This amount must be paid immediately even though construction will take three years to complete (years 0 1 and 2). Year 3 will be spent testing the production line and hence, it will not yield any positive cash flows, if the operation is very successful, the company can expect after tax cash savings of $76 million per year in each of years 4 through 7. After reviewing the use of these systems with the management of other companies, Square's controller has concluded that the operation will most probably result in annual savings of $4.2 million per year for each of years 4 through 7. However, it is entirely possible that the savings could be as low as $3.4 million per year for each of years 4 through 7 The company uses a 15 percent discount rate. Use Exhibit A8. Required: Compute the NPV under the three scenarlos (Round PV factor to 3 decimal places. Enter your answers in thousands of dollars. Negotive amounts should be indicated by a minus sign.) Best Case Expected Worst Case Not present Value Problem A-18 (Algo) Sensitivity Analysis in Capital Investment Decisions Square Manufacturing is considering investing in a robotics manufacturing line. Installation of the line will cost an estimated $10.6 million. This amount must be paid immediately even though construction will take three years to complete (years 0 1 and 2). Year 3 will be spent testing the production line and hence, it will not yield any positive cash flows, if the operation is very successful, the company can expect after tax cash savings of $76 million per year in each of years 4 through 7. After reviewing the use of these systems with the management of other companies, Square's controller has concluded that the operation will most probably result in annual savings of $4.2 million per year for each of years 4 through 7. However, it is entirely possible that the savings could be as low as $3.4 million per year for each of years 4 through 7 The company uses a 15 percent discount rate. Use Exhibit A8. Required: Compute the NPV under the three scenarlos (Round PV factor to 3 decimal places. Enter your answers in thousands of dollars. Negotive amounts should be indicated by a minus sign.) Best Case Expected Worst Case Not present Value

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