Question
In: Finance
LMN Co. is considering a four-year project to improve its production efficiency. Buying a new machine...
LMN
Co. is considering a four-year project to improve its production
efficiency. Buying a new machine for $504,653 is estimated to
result in $193,497 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 $69,336. The press also requires an
initial investment in spare parts inventory of $18,633, along with
an additional $3,427 in inventory for each succeeding year of the
project, with full recovery at the end of year 4. If the shop's tax
rate is 33 percent and its discount rate is 12 percent, what is the
NPV? (use the MACRS Depreciation table below)
Year MACRS Depreciation table
1.
20.00%
2.
32.00
3.
19.20
4.
11.52
5.
11.52
6.
5.76
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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