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Luxury Car Corp is considering a four-year project to improve its production efficiency. Buying a new...
Luxury Car Corp is considering a four-year project to improve its production efficiency. Buying a new machine press for $237,600 is estimated to result in $179,200 in annual pretax cost savings. The new machine will be depreciated in straight line basis and it will have a salvage value at the end of the project of $78,400 (before taxes). The press also requires an initial investment in net working capital of $28,400. If the shop's tax rate is 34 percent and its discount rate is 19 percent, what is the NPV for this project?
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jeff jeffy answered 1 year agoRelated Solutions
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Workshop buy in the new machine...
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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
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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...
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