Annual pretax cost savings

Assignment Help Financial Management
Reference no: EM13913192

Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $240,000 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 $96,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $3,500 in inventory for each succeeding year of the project. The shop’s tax rate is 30 percent and its discount rate is 8 percent. MACRS schedule Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $

Reference no: EM13913192

Questions Cloud

Projects unit sales for seven-octave voice emulation implant : Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 75,000 2 88,000 3 102,000 4 97,000 5 78,000 Production of the implants will require $1,540,000 in net working capital to star..
What is justification behind decision of boards of directors : Is the board of directors of Big Petroleum committing a waste of corporate assets by its decision not to invoke the legal limitation of damages?
Which the treatment program is designed to serve : Discuss the following information in your paper: The offender population which the treatment program is designed to serve. How the treatment addresses risk and protective factors and/or special needs of offenders
Calculate the cost of the ending inventory and the cost : At the end of April, 1,050 hats were in ending inventory. Calculate the cost of the ending inventory and the cost of the hats sold during April.
Annual pretax cost savings : Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $570,000 is estimated to result in $240,000 in annual pretax cost savings. The shop’s tax rate is 30 percent and its discount..
What is the payback period-profitability index of project : Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other..
Perform a combined genome/epigenome : At a genetics course, the question asked by the tutor was: "Suppose we perform a combined genome/epigenome-wide association study where we measure the genotype and methylation of a cohort of disease cases and healthy controls. Consider the genotype a..
Federal and state rule of evidence or statute : Explain how at least one federal and one state rule of evidence or statute might affect the prosecution of sexual assault. Be specific
Depreciated straight-line to zero over its five-year life : Your firm is contemplating the purchase of a new $570,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. If the tax rate is 35 percent, what is the IRR for this project?

Reviews

Write a Review

Financial Management Questions & Answers

  Following activities will affect a bank''s required reserves

Which of the following activities will affect a bank's required reserves? a. The local Girl Scout troop collects coins and currency to buy a new camping stove. The troop deposits $ 250 in coins and opens a small time deposit. b. You decide to move $ ..

  What was the growth rate in earnings per share

10 years ago, Weed Go Inc. earned $0.53 per share. Its earnings this year were $4.58. What was the growth rate in earnings per share (EPS) over the 10-year period? State your answer as a percentage to two decimal places (e.g. 16.38%). The % sign is n..

  Concept of required return on proposed capital investments

Explain the theory behind the concept of "required return" on proposed capital investments.

  Future value-make single investment

(Future Value) Sarah Wiggum would like to make a single investment and have $2 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? What if Sarah w..

  Managing effective teams scenario questionsstarting a new

scenario questions ltbrgt ltbrgt ltbrgt?starting a new product or service line that will require new kinds of employees

  What is the firms weighted average cost of capital

A firm has debt of $90,000, equity of $140,000, a leveraged value of $100,000, a cost of debt of 6%, a cost of equity of 12%, and a tax rate of 40%. What is the firm's weighted average cost of capital?

  Bond outstanding with an annual coupon rate

General Mills has a $1,000 par value, 12-year bond outstanding with an annual coupon rate of 3.60 percent per year, paid semi-annually. Market interest rates on similar bonds are 12.70 percent. Calculate the bond's price today.

  What is the current yield for bond

Bond P is a premium bond with a 9 percent coupon. Bond D is a 5 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 7 percent, and have 10 years to maturity. What is the current yield for Bond P and Bon..

  Savings bonds and coupon rate

The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell your 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years..

  Important for leaders to evaluate financial performance

Why is it important for leaders to evaluate financial performance? What actions can you take in your own role to evaluate the financial performance of your department? How can this information be used to your advantage as well as your firms?

  Currently pay dividends-future dividend stream

Peterson Packaging Incorporated does not currently pay dividends. The company will start with a $0.50 dividend at the end of year three and grow it by 10% for each of the next six years until it nearly reaches $1.00. After six years of growth, it wil..

  A short-term creditor would be most interested in

A short-term creditor would be most interested in

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd