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Pendergrass Tool & Machines is considering adding a robotic…

Posted byAnonymous July 4, 2026

Questions

Pendergrаss Tооl & Mаchines is cоnsidering аdding a robotic paint sprayer to its production line. The sprayer's base price is $820,000, and it would cost another $19,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $515,000. 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 $15,000. The sprayer would not change revenues, but it is expected to save the firm $342,000 per year in before-tax operating costs, mainly labor. Pendergrass' marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Do not round intermediate calculations. Do not enter % or $ signs.  What is the project's NPV at a 10% cost of capital?

Tags: Accounting, Basic, qmb,

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