Question

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,020,000, and it would cost another $17,500 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 $682,000. The machine would require an increase in net working capital (inventory) of $12,000. The sprayer would not change revenues, but it is expected to save the firm $425,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 30%.

(A) What is the Year 0 net cash flow?

$

(B) What are the net operating cash flows in Years 1, 2, and 3? Do
not round intermediate calculations. Round your answers to the
nearest dollar.

Year 1 | $ |

Year 2 | $ |

Year 3 | $ |

(C) What is the additional Year 3 cash flow (i.e, the after-tax
salvage and the return of working capital)? Do not round
intermediate calculations. Round your answer to the nearest
dollar.

$

(D) If the project's cost of capital is 14 %, what is the NPV of
the project? Do not round intermediate calculations. Round your
answer to the nearest dollar.

$

Answer #1

The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$880,000, and it would cost another $18,500 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 $625,000. The machine would require
an increase in net working capital (inventory) of $12,000. The
sprayer would not change revenues, but it is...

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 another $22,000 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 $547,000. The machine would require
an increase in net working capital (inventory) of $17,000. The
sprayer would not change revenues, but it is...

The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,140,000, 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 $626,000. The machine would require
an increase in net working capital (inventory) of $11,500. The
sprayer would not change revenues, but it is...

The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,030,000, and it would cost another $21,000 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 $582,000. The machine would require
an increase in net working capital (inventory) of $19,000. The
sprayer would not change revenues, but it is...

New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,040,000, and it would cost another $20,500 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 $663,000. The machine would require
an increase in net working capital (inventory) of $9,000. The
sprayer would not change revenues, but...

The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$990,000, and it would cost another $18,000 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $600,000. 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 $13,000. The sprayer
would not change revenues, but...

The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$920,000, and it would cost another $22,000 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, 0.1481, and 0.0741. The machine would
require an increase in net working capital (inventory) of $13,500.
The sprayer would not change revenues,...

The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$900,000, and it would cost another $22,000 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $600,000. 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 $17,500. The sprayer
would not change revenues, but...

New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$870,000, and it would cost another $24,000 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 $644,000. The machine would require
an increase in net working capital (inventory) of $16,500. The
sprayer would not change revenues, but...

New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,050,000, and it would cost another $19,000 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 $564,000. The machine would require
an increase in net working capital (inventory) of $12,000. The
sprayer would not change revenues, but...

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