The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayers base price is $969,000, and it would cost another $25,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $510,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the firm $302,000 per year in before-tax operating costs, mainly labor. Campbells marginal tax rate is 22%.

What is the Year-0 cash flow?

What are the project recurring cash flows in Years 1, 2, and 3?

What is the additional Year-3 cash flow (i.e., the after-tax salvage and the return of working capital)?

If the projects cost of capital is 12%, what is the NPV?