Question
MACRS schedule: Starset Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $435,000 is estimated to
MACRS schedule:
Starset Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $435,000 is estimated to result in $175,000 in annual pretax cost savings. The press falls in the 5-year MACRS class, and it will have a salvage value at the end of the project of $71,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $3,600 in inventory for each succeeding year of the project. The shops tax rate is 25 percent and its discount rate is 12 percent. (MACRS schedule) |
Calculate the NPV of this project. |
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