Four-year project to improve its production efficiency

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Reference no: EM132008974

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $720,000 is estimated to result in $240,000 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 $105,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $4,500 in inventory for each succeeding year of the project.

Required :

If the shop's tax rate is 31 percent and its discount rate is 17 percent, what is the NPV for this project? (Do not round your intermediate calculations.)

$-92,395.74

$-89,656.88

$-158,845.29

$-97,015.53

$-87,775.95

Reference no: EM132008974

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