D Question 9 5 pts The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $900,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $504,000. 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 $12,500. The sprayer would not change revenues, but it is expected to save the firm $325,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. The cost of capital is 8%. What is the NPV of this potential project? Do not round intermediate calculations. Round your final answer to the nearest dollar. "NOTE...depending on your rounding procedures, you might 'miss' MY version of the right answer by a few dollars (probably less than $100...maybe more like a few dollars). So in this case, you may select the 'close' answer below....I've intentionally left large gaps between the potential answer option... O $407,589 O $304,812 $80,227 O $202,900 O $115,226
D Question 9 5 pts The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $900,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $504,000. 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 $12,500. The sprayer would not change revenues, but it is expected to save the firm $325,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. The cost of capital is 8%. What is the NPV of this potential project? Do not round intermediate calculations. Round your final answer to the nearest dollar. "NOTE...depending on your rounding procedures, you might 'miss' MY version of the right answer by a few dollars (probably less than $100...maybe more like a few dollars). So in this case, you may select the 'close' answer below....I've intentionally left large gaps between the potential answer option... O $407,589 O $304,812 $80,227 O $202,900 O $115,226
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:D
Question 9
5 pts
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $900,000,
and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years
for $504,000. 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 $12,500. The sprayer would not change revenues, but it is expected to save the firm
$325,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. The cost of capital is 8%.
What is the NPV of this potential project? Do not round intermediate calculations. Round your final answer to the nearest dollar.
"NOTE...depending on your rounding procedures, you might 'miss' MY version of the right answer by a few dollars (probably less
than $100...maybe more like a few dollars). So in this case, you may select the 'close' answer below....I've intentionally left large
gaps between the potential answer option...
O $407,589
O $304,812
$80,227
O $202,900
O $115,226
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