Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Geary Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $791,949 is estimated to result in

Geary Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $791,949 is estimated to result in $224,222 in annual pretax cost savings. The press falls in the MACRS five-year class (Refer to the MACRS table on page 277), and it will have a salvage value at the end of the project of $114,884. The press also requires an initial investment in spare parts inventory of $67,707, along with an additional $13,181 in inventory for each succeeding year of the project. If the shop's tax rate is 0.38and its discount rate is 0.13, what is the total cash flow in year 4?

MARCS table:

Year Percentage

1 20%

2 32%

3 19.20%

4 11.52%

5 11.52%

6 5.76%

(Do not round your intermediate calculations.)

(Make sure you enter the number with the appropriate +/- sign)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations of Finance The Logic and Practice of Financial Management

Authors: Arthur J. Keown, John D. Martin, J. William Petty

8th edition

132994879, 978-0132994873

More Books

Students also viewed these Finance questions

Question

What jobs exist now? LO1

Answered: 1 week ago