Question
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,104,000 is estimated to result in
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,104,000 is estimated to result in $368,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $161,000. The press also requires an initial investment in spare parts inventory of $46,000, along with an additional $6,900 in inventory for each succeeding year of the project. |
If the shop's tax rate is 31 percent and its discount rate is 13 percent, what is the NPV for this project? (Do not round your intermediate calculations.) |
A.$-49,638.87
B.$-46,042.62
C.$-166,739.25
D.$-52,120.82
E.$-47,156.93
Property Class Three-Year 33.33% 44.45 14.81 7.41 Year Seven-Year 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 Five-Year 2 3 4 5 6 7 8 20.00% 32.00 19.20 11.52 11.52 5.76
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