Cost-Cutting Proposals [LO2] Purple Haze Machine Shop is considering a fouryear

project to improve its production effi ciency. Buying a new machine press for

$470,000 is estimated to result in $190,000 in annual pretax cost savings. The press

falls in the MACRS fi ve-year class, 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 $2,500 in inventory for each succeeding

year of the project. If the shops tax rate is 35 percent and its discount rate

is 9 percent, should the company buy and install the machine press?