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In: Finance
CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
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CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $397,000 is estimated to result in $145,000 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 $46,000. The press also requires an initial investment in spare parts inventory of $15,100, along with an additional $2,100 in inventory for each succeeding year of the project. The shop’s tax rate is 21 percent and its discount rate is 8 percent. Calculate the project's NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Solutions
jeff jeffy answered 2 hours agoRelated Solutions
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The press falls in the MACRS five-year class, and it will have a
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its production efficiency. Buying a new machine press for $950,400
is estimated to result in $316,800 in annual pretax cost savings.
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inventory of $39,600, along with an additional $5,940 in inventory
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