Cost-Cutting Proposals Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for £560,000 is estimated to result in £210,000 in annual pre-tax cost savings. The press is depreciated using the 20 per cent reducing-balance method, and it will have a salvage value at the end of the project of £80,000. The press also requires an initial investment in spare parts inventory of

£20,000, along with an additional £3,000 in inventory for each succeeding year of the project. If the shops tax rate is 28 per cent and its discount rate is 9 per cent, should the company buy and install the machine press?