1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
stich3 [128]
2 years ago
5

The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,020,00

0, and it would cost another $22,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $599,000. 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 $19,500. The sprayer would not change revenues, but it is expected to save the firm $386,000 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. What is the Year-0 net cash flow? $ What are the net operating cash flows in Years 1, 2, and 3? Year 1: $ Year 2: $ Year 3: $ What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital)? $ If the project's cost of capital is 11%, what is the NPV of the project? $ Should the machine be purchased? -Select-
Mathematics
1 answer:
tatyana61 [14]2 years ago
5 0

1. The Year-0 net cash flow is -$1,061,500.

2. The net operating cash flows in Years 1, 2, and 3 are as follows:

Year 1: $288,750 ($386,000 x 1 - 0.25)

Year 2: $288,750 ($386,000 x 1 - 0.25)

Year 3: $288,750 ($386,000 x 1 - 0.25)

3. The additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital) is $468,750 {($599,000 x 1 - 0.25) + $19,500}.

4. The NPV of the project is ($13,139).

5. The machine should not be purchased because it does not yield a positive NPV.

<h3>What is the net present value?</h3>

The net present value (NPV) shows the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

It is determined by calculating the present values of cash flows using their present value factors as below:

<h3>Data and Calculations:</h3>

Initial cash outlay = $1,061,500 ($1,020,000 + $22,000 + $19,500)

Salvage value = $599,000

Increase in net working capital = $19,500

Annual savings before tax = $386,000

Tax rate = 25%

Annuial savings after tax = $288,750 ($386,000 x 1 - 0.25)

<h3>Determination of Net Present Value (NPV):</h3>

Year      Cashflows        PV Factor     Present Value

0          -$1,061,500               1             -$1,061,500

1              $288,750          0.901           $260,164

2             $288,750          0.812          $234,465

3             $288,750          0.731            $211,076

3             $468,750          0.731          $342,656

Net present value                                -$13,139

Thus, the project should not be undertaken by The Campbell Company due to the negative NPV that it yields.

Learn more about determining the NPV at brainly.com/question/18848923

#SPJ1

You might be interested in
Shirley is decorating the gym for a party, she has 4 rolls of blue streamer and 7 rolls of green streamer. if each roll of blue
Radda [10]
You do 4 times 95 and you get 380 plus 7 times 84 and that's 588 and 380+588=<span>968 feet.</span>
3 0
3 years ago
Mr. soto's bicycle weighs 30 pounds. mr.soto's car weighs 90 times as much as his bicycle. what is the weight, in pounds, of mr.
valentina_108 [34]
2,700 pounds ... 1.7 Tons
7 0
3 years ago
5/13 of 26 is what number
Vlad1618 [11]

Answer:10

Step-by-step explanation:26/13 is 2 therefore 5 times 2 is 10

6 0
3 years ago
Read 2 more answers
How do you graph D? PLz explain. HELPPPPPPPPPPPPPPP
yanalaym [24]
See the attached image for the graph. Specifically figure 2 is the graph you want. You can leave the red points on the graph or decide to erase them (leave behind the blue line though). 

To generate each of the red points, you'll plug in various x values to get corresponding y values.

For instance, plug in x = 0 and we get...
y = -|x-6| - 6
y = -|0-6| - 6
y = -|-6| - 6
y = -6 - 6
y = -12
So when x = 0, the y value is -12. The x and y value pair up to get (x,y) = (0,-12)

Another example: plug in x = 2
y = -|x-6| - 6
y = -|2-6| - 6
y = -|-4| - 6
y = -4 - 6
y = -10
So the point (2,-10) is on the graph

The idea is to generate as many points as possible so we get an idea of what this thing looks like. 

Generate enough points, and you'll get what you see in Figure 1 (see attached image)

Then draw a line through all of the points. The more points you use, the more accurate the drawing. Doing that will generate the blue function curve you see in Figure 2 (also attached)

3 0
3 years ago
Read 2 more answers
How many graduates from university a had an income under 20,000
USPshnik [31]
I believe about two thirds
4 0
2 years ago
Other questions:
  • How many times can 49 go into 817
    8·2 answers
  • A bicycle manufacturing company makes a particular type of bike. Each child bike requires 4 hours to build and 4 hours to test.
    13·1 answer
  • What is the slope of the line that passes through (2 0 ) and (5 0)
    12·2 answers
  • Name a fourth point in plane ZWU.
    14·1 answer
  • Use a sum identity to find the exact value of cos 285.
    12·1 answer
  • QUICK HELPPP 20 POINTS<br> What is the solution to the equation?
    13·2 answers
  • 17. The function rule C = 40n + 210 relates the number of months n to cost in dollars C of a phone plan and budget phone. Make a
    7·1 answer
  • Simplify the expression 5 + (15 + x).<br> A. 5x + 20<br> B. x + 20<br> C. x + 5<br> D. x+ 15
    13·2 answers
  • A scientist was measuring the daily sodium values of different foods with a soda has 35.64% of the daily value and fries have 32
    8·1 answer
  • Write 7,062.01 in expanded form
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!