New-Project Analysis The Campbell Company is considering addinga robotic paint sprayer to its production line. The sprayer's baseprice is $850,000, and it would cost another $23,000 to install it.The machine falls into the MACRS 3-year class (the applicable MACRSdepreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and itwould be sold after 3 years for $557,000. The machine would requirean increase in net working capital (inventory) of $13,500. Thesprayer would not change revenues, but it is expected to save thefirm $414,000 per year in before-tax operating costs, mainly labor.Campbell's marginal tax rate is 30%. What is the Year 0 net cashflow? $ What are the net operating cash flows in Years 1, 2, and 3?Do not round intermediate calculations. Round your answers to thenearest dollar. Year 1 $
Year 2 $
Year 3 $
What is the additional Year 3 cash flow (i.e, the after-taxsalvage and the return of working capital)? Do not roundintermediate calculations. Round your answer to the nearest dollar.$
If the project's cost of capital is 15 %, what is the NPV of theproject? Do not round intermediate calculations. Round your answerto the nearest dollar. $ Should the machine be purchased?
