What is the year-0 net cash flow

Assignment Help Managerial Accounting

Reference no: EM133269746

Question: 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 $23,000 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 $19,500. The sprayer would not change revenues, but it is expected to save the firm $319,000 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 14%, what is the NPV of the project?

Reference no: EM133269746

Questions Cloud

What is the primary business purpose of fitting : This question pertains to decision trees and the Telco data set. What is the primary BUSINESS purpose of fitting the decision tree?

Determining the risks and threats to either development : Determining the risks and threats to either development or release of a product with problems in meeting deadlines is a good starting point. Who can help determ

Determine the cost per equivalent : ACC 535 University of Phoenix Determine the cost per equivalent. Determine the cost of the goods transferred out of the finishing department.

Discuss ict or technology trends utilized for transportation : State and discuss ICT or technology trends utilized for transportation business and Evo car share provide sources or references used

What is the year-0 net cash flow : FIN 510 DeVry University, Chicago What is the Year-0 net cash flow? b. What are the net operating cash flows in Years 1, 2, and 3?

What are the 2 inputs to that and gate : In a D Flip Flop used as a 4-bit register, the clock is controlled with an AND gate.

What is the equipment''s after-tax net salvage value : FIN 510 DeVry University, Chicago What is the equipment's after-tax net salvage value? Enter your answer in dollars. For example, an answer of $1.2 million

Calculate the batting average of a baseball player : Design an application (BattingAve) that calculates the batting average of a baseball player over a number of games. A batting average is calculated by dividing

Explain functional and non-functional requirements : 'Functional requirements view: It emphasizes the functional requirements of the system from the user's point of view. Includes use case diagrams''. Functional r

User Account

All Pages