In: Finance
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $537,600 is estimated to result in $179,200 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 $78,400. The press also requires an initial investment in spare parts inventory of $22,400, along with an additional $3,360 in inventory for each succeeding year of the project. |
If the shop's tax rate is 22 percent and its discount rate is 15
percent, what is the NPV for this project? |