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The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $93,000, and it would cost another $79,000

The Campbell Company is evaluating the proposed acquisition of a new milling machine. The machine's base price is $93,000, and it would cost another $79,000 to modify it for special use. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $56,000. The machine would require an increase in net working capital (inventory) of $5,000. The milling machine would have no effect on revenues, but it is expected to save the firm $49,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 40%. a. What is the net cost of the machine for capital budgeting purposes? (That is, what is the Year 0 net cash flow?) $?? b.What are the net operating cash flows in Years 1, 2, and 3? Round your answers to the nearest dollar. Year 1 $?? Year 2 $?? Year 3 $?? c.What is the additional Year 3 cash flow (that is, the after-tax salvage and the return of working capital)? Round your answer to the nearest dollar. $?? d.If the project's cost of capital is 15 %, should the machine be purchased? -Select-YesNo

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