Question
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $960,000 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 $960,000 is estimated to result in $320,000 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 $140,000. The press also requires an initial investment in spare parts inventory of $40,000, along with an additional $6,000 in inventory for each succeeding year of the project. If the shop's tax rate is 24 percent and its discount rate is 8 percent, what is the NPV for this project?
$100,651.77
$102,883.81
$-20,049.78
$105,684.36
$95,619.18
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