Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,027,200 is estimated to result in $342,400 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 $149,800. The press also requires an initial investment in spare parts inventory of $42,800, along with an additional $6,420 in inventory for each succeeding year of the project.

  

Required :

If the shop's tax rate is 32 percent and its discount rate is 15 percent, what is the NPV for this project? (Do not round your intermediate calculations.)

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of the project we need to determine the cash flows associated ... View the full answer