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?
