Calculate the npv of the project

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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

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