Geary Machine Shop is considering a four-year project to improve its production

Question

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $835,200 is estimated to result in $278,400 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 $121,800. The press also requires an initial investment in spare parts inventory of $34,800, along with an additional $5,220 in inventory for each succeeding year of the project. Required : If the shop's tax rate is 31 percent and its discount rate is 17 percent, what is the NPV for this project? (Do not round your intermediate calculations.) Options: $-107,179.06 $-104,001.99 $-184,260.54 $-112,538.01 $-101,820.11

Explanation / Answer

$-112,538.01

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