Considering four-year project to improve

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CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $499,000 is estimated to result in $198,000 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 $62,000. The press also requires an initial investment in spare parts inventory of $22,400, along with an additional $4,400 in inventory for each succeeding year of the project. The shop’s tax rate is 40 percent and its discount rate is 11 percent. This is a hard one! I haven't found the right answer yet.

Reference no: EM131553287

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