Considering project to improve production efficiency

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Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $864,000 is estimated to result in $288,000 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 $126,000. The press also requires an initial investment in spare parts inventory of $36,000, along with an additional $5,400 in inventory for each succeeding year of the project.

Required :

If the shop's tax rate is 34 percent and its discount rate is 10 percent, what is the NPV for this project? (Do not round your intermediate calculations.)

Reference no: EM131905720

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