Four-year project to improve its production efficiency

Assignment Help Financial Management

Reference no: EM131904097

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,084,800 is estimated to result in $361,600 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 $158,200. The press also requires an initial investment in spare parts inventory of $45,200, along with an additional $6,780 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 31 percent and its discount rate is 18 percent, what is the NPV for this project? (Do not round your intermediate calculations.)

Reference no: EM131904097

Questions Cloud

Early exercise of the call option is optimal : what is the maximum strike price where it could be possible that early exercise of the call option is optimal?

Find their regular monthly payment : Find their regular monthly payment. How many payments of $1000 will it take to pay off the loan?

How could businesses use the connections : Excel is not just a standalone program. It has the ability to connect and interact with other programs and applications.

What did you learn about negotiation from this situation : What did you learn about yourself in this experience?What did you learn about the behavior of others from this experience?

Four-year project to improve its production efficiency : Geary Machine Shop is considering a four-year project to improve its production efficiency.

How will the tools accentuate industry best practice : As students, you continue your education to gain knowledge and broaden your career opportunities. How will the tools you have learned from this class help you.

What did you see and experience or hear about locally : You have been recruited by the Campus to take part in a new initiative called Compliance Officers on a Mission for a More Ethical tomorrow (COMET).

Canadian dollar over-valued or under-valued : What is the real exchange rate between US and Canada? According to the Law of One Price, is the Canadian dollar over-valued or under-valued?

Identify the steps of the risk management process : Differentiate between the consensus, ratio, and apportion methods? Provide an example for when each method is used.

User Account

All Pages