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Needs to be done in excel showing all the work The Campbell Company is considering adding...

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Finance

Needs to be done in excel showing all the work

The Campbell Company is considering adding a robotic paintsprayer to its production line. The sprayer's base price is$920,000, and it would cost another $20,000 to install it. Themachine falls into the MACRS 3-year class, and it would be soldafter 3 years for $500,000. The MACRS rates for the first threeyears are 0.3333, 0.4445, and 0.1481. The machine would require anincrease in net working capital (inventory) of $15,500. The sprayerwould not change revenues, but it is expected to save the firm$304,000 per year in before-tax operating costs, mainly labor.Campbell's marginal tax rate is 25%.

a. What is the Year-0 cash flow?

b. What are the cash flows in Years 1, 2, and 3?

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

d. If the project's cost of capital is 12%, what is the NPV?

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