Prepare the following problems in Excel and ensure the formulas are present in the appropriate cells:

The Cambell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,080,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3 year class, and it would be sold for $605,000. 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 $15,500. The sprayer would not change revenues, but it is expected to save the firm $380,000 per year in before tax operating cost, mainly labor, Cambell's marginal tax rate is 35%.

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 12%, should the machine be purchased?