Annual pretax cost savings

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Reference no: EM13917470

CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $496,000 is estimated to result in $195,000 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 $60,500. The press also requires an initial investment in spare parts inventory of $22,100, along with an additional $4,100 in inventory for each succeeding year of the project. The shop’s tax rate is 30 percent and its discount rate is 12 percent.

Requirement 1: Calculate the NPV.

Reference no: EM13917470

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Annual pretax cost savings : CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $496,000 is estimated to result in $195,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Ta..

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