Question: I need help with this problem, can you please show me how to do it, thank you Chapman Machine Shop is considering a four-year project

I need help with this problem, can you please show me how to do it, thank you

Chapman Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine for $390,000 is estimated to result in $135,000 in annual pretax cost savings. The machine falls in the MACRS five-year class, and it will have a pretax salvage value at the end of the project of $198,000. The MACRS rates are .2, .32, .192, .1152, .1152, and .0576 for Years 1 to 6, respectively. The project also requires an initial investment in inventory of $10,700. The inventory will return to its original level when the project ends. The shop's tax rate is 21 percent and its discount rate is 16 percent. Should the firm buy and install the machine? 1) What is the book value of the machine when the project ends? 2) What is the amount of UPC each year over the project's life? 3) What is the total cash flow from assets each year over the project's life? 4) What is the NPV of this project? Should this project be accepted according to the NPV criterion

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

A partially completed pension spreadsheet showing the relationships among the elements that constitute Carney, Inc.'s defined benefit pension plan follows. Six years earlier, Carney revised its...

Fin 3311 Mini Test #2(Chapters 9 and 10) Tobin College of Business Due Date:Nov. 15, 2017.Print out and turn in your answer in class on Wednesday **You should be able to do this in under I...

Hi can you please show how to solvet his with steps Tanaka Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $445,000 is estimated...

What's the right answer for Npv? please show all necessary work for computations! thanks! Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

a. What is the cost estimation equation using the data above? b. What is the estimated cost of producing 500 units? c. Is machine hours reliable in estimating manufacturing costs in this example? Why...

can anyone help me to solve this problem. I need it ASAP. Fin 3311 Mini Test #2 (Chapters 9 and 10) Tobin College of Business Due Date: Nov. 14, 2016. Print out and turn in your answer in class on...

CASE FOR ANALYSIS Craft Originalities, Inc. Craft Originalities, Inc. was started by an entrepreneur maxed out with finished goods. Inventory tied up capital, named Bradley (Bibby) Burnett in rural...

I need help with this question please! "Chapman Machine Shop is considering a four-year project to improve its production efficiency. Buying and installing a new machine press for $620,000 will...

and answers / chapman machine shop is considering a... Question: Chapman Machine Shop is considering a 4-year project to improve its production efficiency. Buying... Chapman Machine Shop is...

AAA Shop is considering a project to improve their production efficiency. They are trying to decide whether it is a good idea or not to buy an automated injection molding machine which will result in...

Who are the key participants in the transactions of financial institutions? Who are net suppliers, and who are net demanders?

The chandelier is supported by three chains which are concurrent at point O. If the resultant force at O has magnitude FR and is directed along the negative z axis, determine the force in each chain...

| | | | | | | | | | | 1 5 of 3 0 Concepts completed Due in less than 1 2 hours Multiple Choice Question are expenditures that keep an asset in good operating condion. They are necervary if an asset...

Apparently the answer is 8.89 but not sure can it be properly checked and explained . 3, TWhat is the weighted average cost of capital (WACC) and provide the equation when long??term debt and...