Project to improve production efficiency

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Reference no: EM131903374

Geary Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new machine press for $710000 is estimated to result in $223000 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 $129000. The press also requires an initial investment in spare parts inventory of $57000, along with an additional $8000 in inventory for each succeeding year of the project. If the shop's tax rate is 0.34 and its discount rate is 0.08, what is the total cash flow in year 4? (Do not round your intermediate calculations.)

Reference no: EM131903374

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