Calculate the npv of project for caradoc machine shop

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Caradoc Machine Shop is considering a four-year project to improve its production ef?ciency. Buying a new machine press for $412,000 is estimated to result in $152,000 in annual pre-tax cost savings. The press falls into Class 8 for CCA purposes [CCA rate of 20% per year], and it will have a salvage value at the end of the project of $55,200. The press also requires an initial investment in spare parts inventory of $22,000, along with an additional $3,300 in inventory for each succeeding year of the project. If the shop's tax rate is 35% and its discount rate is 9%.

Problem 1: Calculate the NPV of this project.

Reference no: EM132664664

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