Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the campbell company is considering adding a robot

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

90.2K

Verified Solution

Question

Finance

The Campbell Company is considering adding a robotic paintsprayer to its production line. The sprayer's base price is$1,000,000, and it would cost another $16,500 to install it. Themachine 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 $617,000. The machine would requirean increase in net working capital (inventory) of $12,500. Thesprayer would not change revenues, but it is expected to save thefirm $428,000 per year in before-tax operating costs, mainly labor.Campbell's marginal tax rate is 30%.

  1. What is the Year 0 net cash flow?
  2. What are the net operating cash flows in Years 1, 2, and 3? Donot round intermediate calculations. Round your answers to thenearest dollar.
    Year 1$
    Year 2$
    Year 3$
  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 nearestdollar.
    $
  4. If the project's cost of capital is 13 %, what is the NPV ofthe project? Do not round intermediate calculations. Round youranswer to the nearest dollar.
    $

    Should the machine be purchased?
    Yes or No?

Answer & Explanation Solved by verified expert
4.4 Ratings (816 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

1. explain the properties of water and what makes it unique (need it for study guide). 2....

Biology
Q

Assuming 1.5 ATP per FADH, 2.5 ATP per NADH in mitochondria, compare approximately how many ATP...

Biology
Q

Similarities and differences between the domains provide contradictory information about their potential origins. How do lipid structures...

Biology
Q

‘The presence of peace does not mean the absence of conflict in work organizations. Discuss this...

Psychology
Q

2 chainz

Physics
Q

Suppose one mole of an ideal gas undergoes the reversible cycle ABCA shown in the...

Physics
Q

Orange juice, a raisin bagel, and a cup of coffee from Billy's Breakfast Bar cost...

Calculus
Q

(h1) Journalize the closing...

Accounting
Q

The following information is departmental cost allocation with two service departments and two...

Accounting
Q

Accounting
Q

Why are these wrong??? Required information PA11-1 Analyzing Accounting Equation Effects, Recording Journal...

Accounting
Q

QUESTION ONE The main objective of an audit is to enable the auditor express an...

Accounting