Question
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $547,200 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 $547,200 is estimated to result in $182,400 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 $79,800. The press also requires an initial investment in spare parts inventory of $22,800, along with an additional $3,420 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 30 percent and its discount rate is 19 percent, what is the NPV for this project? (Do not round your intermediate calculations.)
$-89,116.88
$-86,914.71
$-136,234.52
$-93,572.73
$-84,661.04
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