Question
In: Finance
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
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Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $435,000 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 $71,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $3,600 in inventory for each succeeding year of the project. The shop’s tax rate is 25 percent and its discount rate is 12 percent. (MACRS schedule) |
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Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
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Should the company buy and install the machine press? |
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Solutions
jeff jeffy answered 1 year agoRelated Solutions
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$1,113,600 is estimated to result in $371,200 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 $162,400. The press also requires an initial investment in spare
parts inventory of $46,400, along with an additional $6,960 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$816,000 is estimated to result in $272,000 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 $119,000. The press also requires an initial investment in spare
parts inventory of $34,000, along with an additional $5,100 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$729,600 is estimated to result in $243,200 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 $106,400. The press also requires an initial investment in spare
parts inventory of $30,400, along with an additional $4,560 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$1,113,600 is estimated to result in $371,200 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 $162,400. The press also requires an initial investment in spare
parts inventory of $46,400, along with an additional $6,960 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$405,000 is estimated to result in $157,000 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 $57,000. The
press also requires an initial investment in spare parts inventory
of $24,000, along with an additional $3,300 in inventory for each
succeeding year of the...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$854,400 is estimated to result in $284,800 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 $124,600. The press also requires an initial investment in spare
parts inventory of $35,600, along with an additional $5,340 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$931,200 is estimated to result in $310,400 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 $135,800. The press also requires an initial investment in spare
parts inventory of $38,800, along with an additional $5,820 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$1,017,600 is estimated to result in $339,200 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 $148,400. The press also requires an initial investment in spare
parts inventory of $42,400, along with an additional $6,360 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to
improve its production efficiency. Buying a new machine press for
$796,800 is estimated to result in $265,600 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 $116,200. The press also requires an initial investment in spare
parts inventory of $33,200, along with an additional $4,980 in
inventory for each succeeding year...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters 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 $202,000 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 $39,000, along with an additional $4,050 in inventory for each
succeeding year of the...
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