Question

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $547,200 is estimated to result in $182,400 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 $79,800. The press also requires an initial investment in spare parts inventory of $22,800, along with an additional $3,420 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 31 percent and its discount rate is 11 percent, what is the NPV for this project? (Do not round your intermediate calculations.) rev: 09_18_2012 (MC)

A.)$769.68

B.)$2,368.60

C.)$-61,568.94

D.)$808.16

E.)$731.19

Answer 1