The Campbell company is considering adding a robotic paint sprayer to its production line. the sprayers base price is $920,000,and it would another $19,000 to install it. The machine falls into the MACRS 3- year class, and it would be sold after 3-years for $550,000. The MACRS rate 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 $19000. The sprayer would not change revenues, but it is Expected to save the firm $ 357,000 per year in before- tax operating costs. mainly labor. Campbell's marginal tax rate is 25%. a, what is Year-0 net cash flow? b, what are the net operating cash flows in Years 1,2,3? c, what is the additional Year- 3 cash flow, d, if the Projects cost of capital is 12% ,what is the NPV of the project, should the machine be purchased?.

Smework nment: Week 6: Homework Assignm Save Submit Assign tions Problem 11-06 (New-Project Analysis) Che eBook Problem Walk-Through New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $920,000, and it would cost another $19,0 it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $550,000. The MACRS rates for the first three years are 0.3333, 0.4445, The machine would require an increase in net working capital (inventory) of $19,000. The sprayer would not change revenues, but it is expected to save the firm per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%(Ignore the half-year convention for the straight-line method.) Cash out 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-0 net cash flow? $ b. What are the net operating cash flows in Years 1, 2, and 3? Year 1:$ Year 2: $ Year 3: $ c. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the retum of working capital)? S d. If the project's cost of capital is 12%, what is the NPV of the project? BI O hp preso delete home en 9 backspace num lock R [ ] 7 home eriler A pause 1 shift end