Four-year project to improve production efficiency

Assignment Help Financial Management

Reference no: EM132038000

Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $530,000 is estimated to result in $220,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $89,000. The press also requires an initial investment in spare parts inventory of $26,000, along with an additional $3,100 in inventory for each succeeding year of the project. The shop’s tax rate is 35 percent and its discount rate is 9 percent. MACRS schedule.

Calculate the NPV and IRR of this project.

Reference no: EM132038000

Questions Cloud

Explain the ethical and cultural issues : Explain the ethical and cultural issues that must be addressed before you can begin a group in this scenario. Identify the three most important guidelines.

What is the return to the bank on loans : What is the return to the bank on these loans?

Explore the impact of the post-civil war period : This week you explore the impact of the post-Civil War period on criminal behavior and the system charged with regulating such behavior.

How should the concept of diffusion be applied : How should the concept of diffusion of innovations theory be applied to effectively carry out health communication?

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

Create a hypothetical conflict situation : Create a hypothetical conflict or describe a recent conflict situation in which an individual or group from the culture you have been studying was involved.

Determine why change is so difficult for organizations : Determine why change is so difficult for organizations. Propose ways that human resource (HR) specialists can assist in making change easier.

What is the yield to maturity for this bond : What is the yield to maturity for this bond? What would happen to this bond’s price if yield to maturity suddenly dropped to 3.5%?

How strategy increases organizational effectiveness : Assess Southwest Airlines' strategic approach to human resource (HR) management. Determine how its strategy increases organizational effectiveness.

User Account

All Pages