Question
Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $440,000 is estimated to result
Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $440,000 is estimated to result in $175,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $75,000. The press also requires an initial investment in spare parts inventory of $17,000, along with an additional $2,200 in inventory for each succeeding year of the project. The shops tax rate is 30 percent and its discount rate is 8 percent. Refer toTable 10.7. |
Calculate the NPV of this project.(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
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