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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 $10.7 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 $7.7 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 $59 million per year for each of years 4 through 7. However , it is entirely possible that the savings could be as low as $2.5 million per year for each of years 4 through The company uses a 16 percent discount rate. Use Exhibit A8 Required: Compute the NPV under the three scenarios (Round PV foctor 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 Net present value

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