The answer to the NPV that I am getting is $22,761.57. But the system says this

Question

The answer to the NPV that I am getting is $22,761.57. But the system says this is not correct, can someone please lmk what the correct answer is and why ?

CSM Machine Shop is considering a four-year project lo Improve its production efficiency. Buying a new machine press for $504,000 is estimated to result in $203,000 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 $64,500. The press also requires an initial investment in spare parts inventory of $22,900, along with an additional $4,900 in inventory for each succeeding year of the proved. The shop's tax rate is 30 percent and its discount rate is 13 percent. Calculate the NPV (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Should the company buy and install the machine press?

Explanation / Answer

We will calculate the depreciation each year

Year

machinery cost

MACRS Rate

Depreciation

1

$504,000.00

0.2000

100800.00

2

$504,000.00

0.3200

161280.00

3

$504,000.00

0.1920

96768.00

4

$504,000.00

0.1152

58060.80

Book value of the machinery at end 4th year of the project

BV4 = $504,000

Year

machinery cost

MACRS Rate

Depreciation

1

$504,000.00

0.2000

100800.00

2

$504,000.00

0.3200

161280.00

3

$504,000.00

0.1920

96768.00

4

$504,000.00

0.1152

58060.80

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