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Disraeli Gears Inc. manufactures latke - shaped gears. The company is considering the purchase of a new machine press for $ 9 6 0 ,
Disraeli Gears Inc. manufactures latkeshaped gears. The company is considering the purchase of a new machine press for $ The press has a fouryour life and is estimated to result in $ in annual pretax cost savings. The press falls in the MACRS fiveyear class MACRS Table and it will have a salvage value at the end of the project of $ The press also requires an initial investment of $ in spare parts for inventory. An additional $ in inventory will be required for each succeeding year of the project. All investments in inventory will be recovered at the end of the project.
If the shop's tax rate is percent and its discount rate is percent, what is the NPV for this project? Do not round your intermediate calculations.
HINT: Calculate the depreciation for each year and use it to get the after taxsalvage value. Next, calculate OCF using the annual depreciation and then construct CFFA for each year. Now discount all cash flows to get the NPV
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