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In: Finance

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

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,027,200 is estimated to result in $342,400 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 $149,800. The press also requires an initial investment in spare parts inventory of $42,800, along with an additional $6,420 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.)

  

Can you please help me with that one, I keep getting wrong results.

Those are the possible choices:

$1,444.83 $4,446.32 $-115,576.78 $1,517.07 $1,372.59

Solutions

Expert Solution

Computation of NPV


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