Calculate the npv of the project

Assignment Help Finance Basics
Reference no: EM132999748

Blue Line Machine Shop is considering a four-year project to improve its production efficiency. Buying a new macine press for 400,000 is estimated to result in 155,000 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 68,000. The press also requires an initial investment in spare parts inventory of 13,000, along with an additional 1,800 in inventory for each succeeding year of the project. The shops tax rate is 34% and the projects required return is 10%.

Calculate the NPV of the project.

Should the company buy and install the machine press?

Reference no: EM132999748

Questions Cloud

How much overhead will be charged to a job : Everton FC Pty Ltd estimates its overhead costs for their Goodison Park factory will be $300,000 for the coming year. How much overhead will be charged to a job
Identify the trends in prison incarceration rates : Discuss the impact that sentencing laws had on the prison population. In your response, consider mandatory minimum laws and habitual offender laws.
What is the remaining balance on the loan : Consider a 10 year fixed rate mortgage for $175,000 at nominal interest rate of 8%. If the borrower wants to pay off the remaining balance on the mortgage after
Discuss a specific area of homeland security : Discuss a specific area of homeland security that you believe is the most important. Be sure you identify, explain, and substantiate your stance with multiple
Calculate the npv of the project : Blue Line Machine Shop is considering a four-year project to improve its production efficiency. Buying a new macine press for 400,000 is estimated to result in
What is the current market price of the common stock : AG Motor's common stock currently pays an annual dividend of $3.60 per share. What is the current market price of the common stock
How the two regulatory agencies influence : Discuss the purposes of the Nurse Practice Act in your state and its impact on your professional practice. How the two regulatory agencies influence
What is the impact of the point redemptions on profit : When the points are redeemed, how is this accounted for? What is the impact of the point redemptions on profit and cash flow
Evaluate empirical data regarding crime victims by creating : Evaluate empirical data regarding crime victims by creating an annotated bibliography of three scholarly articles on victimology.

Reviews

Write a Review

Finance Basics Questions & Answers

  Problems on correlation, risk, return and costing basics

Problems on correlation, risk, return, Costing basics and Bond valuation and the security that must provide the highest expected rate of return because of the increase risk

  Find the holding period return

Find the holding period return if the interest rate rises to 10 percent after six months. Make sure to annualize the rate.

  What price did you pay for your bond

The bond is callable in 4 years with a $1100 call premium. What price did you pay for your bond?

  What are the 5 questions that ratios answer for us

What are the 5 questions that ratios answer for us? Describe the importance of this information. Which ratios answer each question?

  Net profit for optimix for next year

You have been told that Optimix's sales next year will be $12,000,000 and that the breakeven point will be $8,000,000. Gross margin will be the same.

  What are the nal and irr of the lease

The computer falls into the three-year class for tax depreciation, so MACRS allowances are 0.33, 0.45, 0.15, and 0.07 in Years 1 through 4, respectively (yes, the 3-year class has 4 years...I find humor even in accounting).

  Significant action on the part of the us government

As the case study notes, the banking panic of 1933 was not unique. There had been many previous banking panics periodically over the previous century. What made the banking panic of 1933 so extraordinary that it required significant action on the ..

  Find the value today of an asset

Find the value today of an asset that has just paid cash flow of $620, and that cash flow is expected to grow at a constant rate of 3.80% in perpetuity.

  What is the chance that of the ten students

Assume that students withdrawing from the course are independent events. What is the chance that of the ten students who enroll in the course

  Financial forecasting and planning

Why construct financial forecasts? From a planning perspective, is it necessary to forecast the future as it relates to the organization as well as the industry

  What impact does this have on net cash

A firm has inventories of $2 million for the previous year and $1.5 million for the current year. What impact does this have on net cash provided by operations

  What can we infer about the valuation of coca-cola

The Pepsi company has a price-to-earning ratio of about 30 with earnings of about $3.40 per share. It currently trades at about $100/share

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