Question
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,027,200 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 $1,027,200 is estimated to result in $342,400 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 $149,800. The press also requires an initial investment in spare parts inventory of $42,800, along with an additional $6,420 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 34 percent and its discount rate is 17 percent, what is the NPV for this project? (Do not round your intermediate calculations.) rev: 09_18_2012
$-141,492.94
$-137,585.50
$-236,737.76
$-148,567.59
$-134,418.29
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