Should the company buy and install the machine press

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CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $498,000 is estimated to result in $197,000 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 $61,500. The press also requires an initial investment in spare parts inventory of $22,300, along with an additional $4,300 in inventory for each succeeding year of the project. The shop’s tax rate is 35 percent and its discount rate is 12 percent. Requirement 1: Calculate the NPV. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Net present value $ Requirement 2: Should the company buy and install the machine press?

Reference no: EM131185394

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Should the company buy and install the machine press : CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $498,000 is estimated to result in $197,000 in annual pretax cost savings. Should the company buy and install the machine press?

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