Four-year project to improve production efficiency

Assignment Help Financial Management

Reference no: EM131044784

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $502,000 is estimated to result in $201,000 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 $63,500. The press also requires an initial investment in spare parts inventory of $22,700, along with an additional $4,700 in inventory for each succeeding year of the project. The shop’s tax rate is 35 percent and its discount rate is 12 percent. Requirement 1: Calculate the NPV. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Net present value $ Requirement 2: Should the company buy and install the machine press?

Reference no: EM131044784

Questions Cloud

Hours with a standard deviation : The mean finish time of all participants in a recent large duathlon was 1.67 hours with a standard deviation of 0.25 hours. Suppose a random sample of 30 participants in the 40-44 age group was taken and the mean finishing time was found to be 1.6..

Probability of committing a type ii error : For a given test on whether the man has a heart attack, the probability of committing a Type II error is: P (The hospital does not admit him as a heart attack patient| The man has a heart attack).

Evaluate the various persuasive forms of leadership : Describe the difference between public and private sector leadership. Evaluate the various persuasive forms of leadership. Describe the various ways a leader might be persuasive and facilitate change.

Formulate the problem and characterize its solution : Consider a modification to (11.43) where you do not penalize the constant. Formulate the problem, and characterize its solution.

Four-year project to improve production efficiency : CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $502,000 is estimated to result in $201,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Ta..

Confidence interval estimate for mean production rate : The sample mean production rate for the 18 employees was 80 parts per hour. The sample standard deviation was 10 parts per hour. Construct the 90% confidence interval estimate for the mean production rate for the new method.

Analyst following both cinnamon and cambridge : Cinnamon, Inc. is a diversified manufacturing company headquartered in the United Kingdom. It complies with IFRS. In 2009, Cinnamon held a 19 percent passive equity ownership interest in Cambridge Processing that was classified as available-for-sa..

Develop a scatter diagram : a. Develop a scatter diagram. b. Show correlation at the 0.05 significance level. c. Develop the regression line for the data. d. Add the regression line to your scatter diagram.

What are some benefits and drawbacks of the expository : What are some benefits and drawbacks of the expository, guided inquiry, and free discovery teaching methodologies? Discuss.

User Account

All Pages