The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,080,000 and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $605,000. 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 $380,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%.

A. What is the Year-0 net cash flow?

B. What are the net operating cash flows in Years 1,2, and 3?

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

D. If the project's cost of capital is 12%, should the machine be purchased?

PLEASE DO NOT USE EXCEL TO ANSWER QUESTION