Caradoc Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

Caradoc Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $413,000 is estimated to result in $153,000 in annual pre-tax cost savings. The press falls into Class 8 for CCA purposes (CCA rate of 20% per year), and it will have a salvage value at the end of the project of $55,300. The press also requires an initial investment in spare parts inventory of $23,000, along with an additional $3,400 in inventory for each succeeding year of the project. If the shop’s tax rate is 35% and its discount rate is 9%.

Calculate the NPV of this project. (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

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Expert Solution

Based on the given data, pls find below workings

The NPV for this Project is 4859.03

jeff jeffy answered 1 year ago

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