Question
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $873,600 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 $873,600 is estimated to result in $291,200 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 $127,400. The press also requires an initial investment in spare parts inventory of $36,400, along with an additional $5,460 in inventory for each succeeding year of the project. |
Required : |
If the shop's tax rate is 32 percent and its discount rate is 16 percent, what is the NPV for this project? (Do not round your intermediate calculations.) |
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