Question

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $729,600 is estimated to result in $243,200 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 $106,400. The press also requires an initial investment in spare parts inventory of $30,400, along with an additional $4,560 in inventory for each succeeding year of the project.

  

Required :

If the shop's tax rate is 31 percent and its discount rate is 8 percent, what is the NPV for this project? (Do not round your intermediate calculations.)

  
Options:

$56,700.03

$58,396.39

$-36,045.45

$59,535.04

$53,865.03

Answer 1