Solution-Elrondbuy and install the machine press

Elrondbuy and install the machine press

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Reference no: EM131428786

Project Analysis. Elrond's Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $480,000 is estimated to result in $205,000in annual pre-tax cost savings. The press falls in CCA Class 43, with a 30 percent rate, and it willhave a salvage value of $55,000 at the end of the project. Elrond will have other assets left in thatasset class when the project is completed. The press also requires an initial investment in spareparts inventory of $21,000, along with an additional $3,000 in inventory for each succeeding yearof the project. If the shop's tax rate is 34 percent and its discount rate is 15 percent, should Elrondbuy and install the machine press?

Reference no: EM131428786

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Elrondbuy and install the machine press

Reference no: EM131428786

Reference no: EM131428786

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