Question

Gray Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $739,200 is estimated to result in $246,400 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 $107,800. The press also requires an initial investment in spare parts inventory of $30,800, along with an additional $4,620 in inventory for each succeeding year of the project.

  

Required :

If the shop's tax rate is 30 percent and its discount rate is 15 percent, what is the NPV for this project? (Do not round your intermediate calculations.)

$-62,705.73

$-60,081.73

$-135,684.39

$-65,841.02

$-59,570.45

Answer 1