Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,020,000, and it would cost another

image text in transcribed
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,020,000, and it would cost another $18,000 to install it. The machine falls into the MACRS 3-year dass (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $557,000. The machine would require an increase in net working capital (inventory) of $16,500. The sprayer would not change revenues, but it is expected to save the firm $460,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35% Cash outflows, if any, should be indicated by a minus sion. Do not round intermediate calculations. Round your answers to the nearest dollar a. What is the Year-O net cash flow? b. What are the net operating cash flows in year 1, 2, and 3? Year 1:3 Year 2:5 Year 3:5 c. What is the additional Year 3 cash flow (le, the after-tax salvage and the return of working capital t's cost of capital is 12 what is the NPV of the prolect? machine be purchased

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Eugene F. Brigham, Phillip R. Daves

12th edition

1285850033, 978-1305480698, 1305480694, 978-0357688236, 978-1285850030

More Books

Students also viewed these Finance questions