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Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $854,400 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 $854,400 is estimated to result in $284,800 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 $124,600. The press also requires an initial investment in spare parts inventory of $35,600, along with an additional $5,340 in inventory for each succeeding year of the project. Required: If the shop's tax rate is 35 percent and its discount rate is 13 percent, what is the NPV for this project? (Do not round your intermediate calculations.)
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