NPV Q-10. A&B

Problem 9-10 Calculating Project NPV [LO 2] Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,300,000. The fixed asset will be deprecioted straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $3,070,000 in annual sales, with costs of $2,090,000. Assume the tax rate is 24 percent and the required return on the project is 11 percent. What is the project's NPV? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.9., 32.16. Tanaka Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $405,000 is estimated to result in $149,000 in ghnnual pretax cost savings. The press falls in the MACRS flve-year class (MACRS schedule) and it will have a salvage value at the end of the project of $50,000. The press also requires an initial investment in spare parts inventory of $15,500, along with an additional $2,500 in inventory for each succeeding year of the project. The shop's tax rate is 25 percent and its discount rate is 12 percent. Calculate the project's NPV. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16