Project to improve its production efficiency

Assignment Help Financial Management

Reference no: EM13730598

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $495,000 is estimated to result in $194,000 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 $60,000. The press also requires an initial investment in spare parts inventory of $22,000, along with an additional $4,000 in inventory for each succeeding year of the project. The shop’s tax rate is 40 percent and its discount rate is 11 percent.

Calculate the NPV.

Reference no: EM13730598

Questions Cloud

Explain motivate positive organizational behavior : How do these needs motivate. How are these needs addressed in an organizational context. Provide an example from your current organization. How well does it address the needs of its organizational members. What best practices can you suggest for o..

Scientists create life : Years ago, a newspaper headline read "Scientists Create Life." Scientists had strung together a chain of nucleotides to make a strand of DNA. This was the first time DNA had been synthesized in a laboratory; it has been synthesized many times since t..

Describe the process used in restoring the scrambled bits : Describe the process used in restoring the scrambled bits and determine the legal and ethical considerations for investigating and prosecuting digital crimesanalyse data.

After tax cash flow from the sale of this asset : Consider an asset that costs $369,600 and is depreciated straight-line to zero over its 7-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $46,200. If the relevant tax rate is 32 percent..

Project to improve its production efficiency : CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $495,000 is estimated to result in $194,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Ta..

Construct implementation strategy for hypothetical company : Construct an implementation strategy for your hypothetical company in which you specify the essential activities and responsibilities. Include a timetable for completion of each component of your strategy

Calculate the return of a security with a beta : The risk-free rate is 4% and the expected rate of return on the market portfolio is 9%. Calculate the return of a security with a beta of 1.28 and an expected rate of return of 12% (rounded to 2 decimal places). Is the security overpriced or underpri..

What is the market risk premium : Stock A has a beta of .8, and investors expect it to return 9%. Stock B has a beta of 1.2, and investors expect it to return 13%. Use the CAPM to find the expected rate of return and the market risk premium on the market. What is the Market Risk Prem..

Define the inputs to risk identification : Define the inputs to risk identification. What tools and techniques need to be implemented on the project to ensure adequate input is received

User Account

All Pages