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What is the npv of the project

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Reference no: EM133004811

Blue line machine shop is considering a four-year project to improve its production efficiency. Buying a new machine press for 460000 is estimated to result in 185000 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 78000. The press also requires an initial investment in spare parts inventory of 19000, along with an additional 2400 in inventory for each succeeding year of the project. The shops tax rate is 34% and the projects required return is 10%. What is the NPV of the project. Should the company buy and install the machine press?

Reference no: EM133004811

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