Business, 28.12.2019 02:31 orlando19882000

The campbell company is considering adding a robotic paint sprayer to its production line. the sprayer's base price $1,080,000, and it would cost another $22,500 to install it. the machine falls into macrs 3-year class, and it would be sold after 3 years for $605,000. the macrs rates for 3 years are 0.333, 0.4445, 0.1481. the machine wold require an increase in the net working capital (inventory) of $15,500. the sprayer would no change revenues, but 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, 3?
c. what is the additional year 3-cash flow (i. e. after tax salvage and the return of working capital)?
d. if the project's cost of capital is 12%, should the machine be purchased?

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The campbell company is considering adding a robotic paint sprayer to its production line. the spray...

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