The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$800,000, and it would cost another $20,500 to install it. The
machine falls into the MACRS 3-year class, and it would be sold
after 3 years for $564,000. 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 $19,000. The sprayer
would not change revenues, but it is expected to save the firm
$353,000 per year in before-tax operating costs, mainly labor.
Campbell's marginal tax rate is 25%. (Ignore the half-year
convention for the straight-line method.) Cash outflows, if any,
should be indicated by a minus sign. Do not round intermediate
calculations. Round your answers to the nearest dollar.
a.What is the Year-0 net cash flow?
b.What are the net operating cash flows in Years 1, 2, and 3?
c.What is the additional Year-3 cash flow (i.e, the after-tax
salvage and the return of working capital)?
d.If the project's cost of capital is 13%, what is the NPV of the
project?
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's...
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 $20,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $500,000. 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 $15,500. 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 $24,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $575,000. 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 $12,000. 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 $840,000, and it would cost another $16,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $642,000. 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 $16,000. 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 $1,040,000, and it would cost another $20,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $535,000. 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...
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 $17,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $630,000. 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 $19,000. The sprayer would not change...
13-6 New Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,080,000.00, and it would cost another $22,500.00 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $605,000.00. 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 $15,500.00. The sprayer would...
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 $16,000 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 $662,000. The machine would require an increase in net working capital (inventory) of $15,000. The sprayer would not change revenues, but it is...
cek 6: Homework The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $910,000, and it would cost another $20,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $489,000. 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 $18,000. The sprayer would not...
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 $20,000 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 $623,000. The machine would require an increase in net working capital (inventory) of $15,500. 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 $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 $631,000. The machine would require an increase in net working capital (inventory) of $20,000. The sprayer would not change revenues, but it is...