Tanaka Machine Shop is considering a four-year project to improve its producti efficiency. Buying a new machine press for $445,000 is estimated to result in $160,00 in annual pretax cost savings. The press falls in the MACRS five-year class, and it we have a salvage value at the end of the project of $40,000. The press also requires a initial investment in spare parts inventory of $20,000, along with an additional $2,800 inventory for each succeeding year of the project. The shop's tax rate is 22 percent an its discount rate is 9 percent. Refer to Table 10.7 Calculate the NPV of this project. (Do not round intermediate calculations and rounc your answer to 2 decimal places, e.g., 32.16.) NPV
Tanaka Machine Shop is considering a four-year project to improve its producti efficiency. Buying a new machine press for $445,000 is estimated to result in $160,00 in annual pretax cost savings. The press falls in the MACRS five-year class, and it we have a salvage value at the end of the project of $40,000. The press also requires a initial investment in spare parts inventory of $20,000, along with an additional $2,800 inventory for each succeeding year of the project. The shop's tax rate is 22 percent an its discount rate is 9 percent. Refer to Table 10.7 Calculate the NPV of this project. (Do not round intermediate calculations and rounc your answer to 2 decimal places, e.g., 32.16.) NPV
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 4P
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