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# The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base

price is \$810,000, and it would cost another \$21,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for \$633,000. 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 \$19,500. The sprayer would not change revenues, but it is expected to save the firm \$317,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.

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

Year 1:\$

Year 2:\$

Year 3:\$

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

\$

• If the project's cost of capital is 13%, what is the NPV of the project?

\$

1: net operating cash flows in Years 1, 2, and 3? Year 1:\$307034.74 Year... View the full answer

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