P$10-21$ Cost$-$Cutting Proposals $[$LO$2]$

Masters Machine Shop is considering a four$-$year project to improve its production efficiency. Buying a new machine press for $$758,400$ is estimated to result in $$252,800$ 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 $$110,600.$ The press also requires an initial investment in spare parts inventory of $$31,600,$ along with an additional $$4,740$ in inventory for each succeeding year of the project.

If the shop's tax rate is $25$ percent and its discount rate is$.15$ percent, what is the NPV for this project?

Multiple Choice

$$-51,887\mathrm{.}10$

$$-49,194\mathrm{.}94$

$$-126,176\mathrm{.}64$

$$-54,481\mathrm{.}45$

$$-49,292\mathrm{.}74$

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