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The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $890,000, and it would cost ancther

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The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $890,000, and it would cost ancther $18,000 to install it. The machine falls into the MACAS 3 -year class, and it would be sold after 3 years for $583,000. The MACR5 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 $19,000. The sprayer would not change revenues, but it is expected to save the firm $3084000 per year in before-tax operating costs, mainly labor, Campbeil's marginal tax rate is 25%. (Ignare the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calcuiations, Round your. answers to the nearest dollar. a. What is the Year-0 net cash flow? b. What are the project yecurring cash flows in Years 1,2 , and 3 ? Year 1:5 Year 2: $ Year 3: 5 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 10N, what is the NPV of the project? 5

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