New-Project Analysis The Campbell Company is considering addinga robotic paint sprayer to its production line. The sprayer's baseprice is $1,030,000, and it would cost another $17,500 to installit. The machine falls into the MACRS 3-year class (the applicableMACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%),and it would be sold after 3 years for $542,000. The machine wouldrequire an increase in net working capital (inventory) of $9,000.The sprayer would not change revenues, but it is expected to savethe firm $463,000 per year in before-tax operating costs, mainlylabor. Campbell's marginal tax rate is 30%. What is the Year 0 netcash flow? $ 1,003,500 What are the net operating cash flows inYears 1, 2, and 3? Do not round intermediate calculations. Roundyour answers to the nearest dollar. Year 1 $ Year 2 $ Year 3 $ Whatis the additional Year 3 cash flow (i.e, the after-tax salvage andthe return of working capital)? Do not round intermediatecalculations. Round your answer to the nearest dollar. $ If theproject's cost of capital is 15 %, what is the NPV of the project?Do not round intermediate calculations. Round your answer to thenearest dollar. $ Should the machine be purchased?
