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...