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The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer s base price is $ 9 2 0 ,

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayers base price is $920,000, and it would cost another $20,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $500,000. 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 $304,000 per year in before-tax operating costs, mainly labor. Campbells marginal tax rate is 25%.
If the projects cost of capital is 12%, what is the NPV?

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