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

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jeff jeffy answered 1 year ago

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