Cost-Cutting Proposals Massey Machine Shop is considering a four-year project to

improve its production efficiency. Buying a new machine press for $730,000 is estimated

to result in $270,000 in annual pretax cost savings. The press falls in the MACRS fiveyear

class, and it will have a salvage value at the end of the project of $70,000. The press

also requires an initial investment in spare parts inventory of $20,000, along with an

additional $3,500 in inventory for each succeeding year of the project. If the shops tax

rate is 35 percent and its discount rate is 8 percent, should Massey buy and install the

machine press?