Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $480,000 is estimated to result in $195,000 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 $81,000. The press also requires an initial investment in spare parts inventory of $21,000, along with an additional $2,600 in inventory for each succeeding year of the project. The shop’s tax rate is 21 percent and the project's required return is 8 percent. Refer to Table 8.3.

Calculate the NPV of this project.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $390,000 is estimated to result in $150,000 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 $66,000. The press also requires an initial investment in spare parts inventory of $12,000, along with an additional $1,700 in inventory for each succeeding year of the...

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $430,000 is estimated to result in $170,000 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 $73,000. The press also requires an initial investment in spare parts inventory of $16,000, along with an additional $2,100 in inventory for each succeeding year of the...

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $460,000 is estimated to result in $185,000 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 $78,000. The press also requires an initial investment in spare parts inventory of $19,000, along with an additional $2,400 in inventory for each succeeding year of the...

1)Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

1)Geller Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $510,000 is estimated to result in $210,000 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 $86,000. The press also requires an initial investment in spare parts inventory of $24,000, along with an additional $2,900 in inventory for each succeeding year of the...

CMS Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

CMS Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $545,000 is estimated to result in $97,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value of $70,000. The press also requires an initial working capital of $21,000, along with an additional $3,000 in working capital for each succeeding years of project. The tax rate is 34%, and the company's...

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,132,800 is estimated to result in $377,600 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 $165,200. The press also requires an initial investment in spare parts inventory of $47,200, along with an additional $7,080 in inventory for each succeeding year...

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $950,400 is estimated to result in $316,800 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 $138,600. The press also requires an initial investment in spare parts inventory of $39,600, along with an additional $5,940 in inventory for each succeeding year...

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $566,400 is estimated to result in $188,800 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 $82,600. The press also requires an initial investment in spare parts inventory of $23,600, along with an additional $3,540 in inventory for each succeeding year...

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $423,000 is estimated to result in $158,000 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 $59,000. The press also requires an initial investment in spare parts inventory of $16,400, along with an additional $3,400 in inventory for each succeeding year...

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $415,000 is estimated to result in $154,000 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 $55,000. The press also requires an initial investment in spare parts inventory of $16,000, along with an additional $3,000 in inventory for each succeeding year...

Subjects