Massey Machine Shop is considering a four-year project to improve its production efficiency.
Q4.Massey Machine Shop is considering a four-year project to improve its production efficiency. Buying a
new machine press for $390,000 is estimated to result in $150,000 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
$66,000. The press also requires an initial investment in spare parts inventory of $12,000, along with an
additional $1,700 in inventory for each succeeding year of the project. The shop’s tax rate is 35 percent
and its discount rate is 9 percent. Refer to Table 6.8. see table at http://ezto.mhhmdemo.mcgrawhill.com/servlet/TestPilot4/laserwords2/13185743031397711.tp4/table10-7.jpg
Calculate the NPV of this project. (Do not round intermediate calculations and round your final
answer to 2 decimal places. (e.g., 32.16))
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