starset machine shop is considering a 4-year project to improve its production efficiency. buying a new machine press conf $475,000 is estimated to result in $199,000 in annual pretax cost savings. the press qualifies for 100 percent bonus depreciation, and it will have a salvage value at the end of the project of 72,000. The press also requires an initial investment in spare parts inventory of 38,000 along with an additional 4000 in inventory for each succeeding year of the project. the shops tax rate is 23 percent and its discount rate is 10 percent. calculate the NPV of this project.
starset machine shop is considering a 4-year project to improve its production efficiency. buying a new machine press conf $475,000 is estimated to result in $199,000 in annual pretax cost savings. the press qualifies for 100 percent bonus depreciation, and it will have a salvage value at the end of the project of 72,000. The press also requires an initial investment in spare parts inventory of 38,000 along with an additional 4000 in inventory for each succeeding year of the project. the shops tax rate is 23 percent and its discount rate is 10 percent. calculate the NPV of this project.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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starset machine shop is considering a 4-year project to improve its production efficiency. buying a new machine press conf $475,000 is estimated to result in $199,000 in annual pretax cost savings. the press qualifies for 100 percent bonus
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