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

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Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $470,000 is estimated to result in $190,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $80,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $2,500 in inventory for each succeeding year of the project. The shop?s tax rate is 35 percent and its discount rate is 9 percent.;Calculate the NPV of this project.

 

Paper#26851 | Written in 18-Jul-2015

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