Question
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $604,800 is estimated to result in
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $604,800 is estimated to result in $201,600 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 $88,200. The press also requires an initial investment in spare parts inventory of $25,200, along with an additional $3,780 in inventory for each succeeding year of the project. |
If the shop's tax rate is 23 percent and its discount rate is 9 percent, what is the NPV for this project? |
Multiple Choice
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$49,331.70
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$50,866.46
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$-23,842.37
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$51,798.29
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$46,865.12
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