Reference no: EM132494896
New-Project Analysis
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 $22,000 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 $587,000. The machine would require an increase in net working capital (inventory) of $18,000. The sprayer would not change revenues, but it is expected to save the firm $497,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%.
Question a. What is the Year 0 net cash flow?
Question b. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.
Year 1
Year 2
Year 3
Question c. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar.
Question d. If the project's cost of capital is 12 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
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Find what is the initial investment outlay
: Talbot Industries, The company spent and expensed $150,000 on research related to the new project last year. Would this change your answer?
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How much will rodney have in five years to put down
: His bank will pay 3 percent interest compounded annually for the five-year GIC. How much will Rodney have in five years to put down on his car?
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Find What is the projects IRR
: A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year for 10 years, and a cost of capital of 9%. What is the project's IRR?
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Determine monthly payment
: Charles wishes to purchase a $3300 jet ski. The jet ski will be financed with a 5-year loan at an annual interest rate of 8.00%. Determine his monthly payment.
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What is the additional year three cash flow
: What is the additional Year three cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations.
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Calculate the present value of the minimum lease payments
: Calculate the present value of the minimum lease payments. make an amortization schedule covering the first 3 years of the lease.
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Determine the total amount he will pay in interest
: Determine the total amount he will pay in interest over the life of the loan.
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What return would you have earned on that investment
: What return would you have earned on that investment? (Enter as a decimal. For example, if your answer was 12.34%, you would enter 0.1234)
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How much gain or loss should be recognized on the bond
: January 1, 2021, at 104. Unamortized bond premium on that date was $176,800. How much gain or loss should be recognized on this bond retirement?
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