The Campbell Companyis considering adding a robotic paint sprayer to its productionline. The sprayer's base price is $800,000, and it would costanother $23,500 to install it. The machine falls into the MACRS3-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$592,000. The machine would require an increase in net workingcapital (inventory) of $10,500. The sprayer would not changerevenues, but it is expected to save the firm $371,000 per year inbefore-tax operating costs, mainly labor. Campbell's marginal taxrate is 30%.
- What is the Year 0 netcash flow?
- What are the net operatingcash flows in Years 1, 2, and 3? Do not round intermediatecalculations. Round your answers to the nearest dollar.
Year 1_____
Year 2 ______
Year 3 _____
  c. What is theadditional Year 3 cash flow (i.e, the after-tax salvage and thereturn of working capital)? Do not round intermediate calculations.Round your answer to the nearest dollar.
  d. If theproject's cost of capital is 11 %, what is the NPV of the project?Do not round intermediate calculations. Round your answer to thenearest dollar.
  e. Should themachine be purchased?
