Problem 9-24 NPV and Bonus Depreciation [LO 2] Tanaka Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $411,000 is estimated to result in $152,000 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 $53,000. The press also requires an initial investment in spare parts inventory of $15,800, along with an additional $2,800 in inventory for each succeeding year of the project. The shop's tax rate is 23 percent and its discount rate is 10 percent. Calculate the project's NPV. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV _
Problem 9-24 NPV and Bonus Depreciation [LO 2] Tanaka Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $411,000 is estimated to result in $152,000 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 $53,000. The press also requires an initial investment in spare parts inventory of $15,800, along with an additional $2,800 in inventory for each succeeding year of the project. The shop's tax rate is 23 percent and its discount rate is 10 percent. Calculate the project's NPV. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV _
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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![Problem 9-24 NPV and Bonus Depreciation [LO 2]
Tanaka Machine Shop is considering a four-year project to improve its
production efficiency. Buying a new machine press for $411,000 is estimated to
result in $152,000 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 $53,000. The press also requires an initial investment in spare parts
inventory of $15,800, along with an additional $2,800 in inventory for each
succeeding year of the project. The shop's tax rate is 23 percent and its
discount rate is 10 percent. Calculate the project's NPV.
Note: Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.
NPV
_](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6b964826-f281-4d3d-90da-effbf7401f90%2Fac2f0e34-1a20-4af7-b5db-862b9a5b9350%2F6fuww1o_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 9-24 NPV and Bonus Depreciation [LO 2]
Tanaka Machine Shop is considering a four-year project to improve its
production efficiency. Buying a new machine press for $411,000 is estimated to
result in $152,000 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 $53,000. The press also requires an initial investment in spare parts
inventory of $15,800, along with an additional $2,800 in inventory for each
succeeding year of the project. The shop's tax rate is 23 percent and its
discount rate is 10 percent. Calculate the project's NPV.
Note: Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.
NPV
_
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