About the annual pretax cost savings

Assignment Help Financial Management
Reference no: EM13913367

Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $390,000 is estimated to result in $150,000 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 $66,000. The press also requires an initial investment in spare parts inventory of $12,000, along with an additional $1,700 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.

Reference no: EM13913367

Questions Cloud

Determine the unit product cost of each of the company : On the basis of your judgment, express whether Johnson Associates is a viable candidate for an ABC system? If yes, why do you feel so, and if no, what makes you feel that way?
What is the net cost of the microwave to the dealer : A household appliance dealer buys microwave ovens from a manufacturer and resells them to its customers. What is the net cost of the microwave to the dealer, assuming it is paid for within 10 days of purchase?
Describe the new features you would add to an automobile : Describe the new features you would add to an automobile designed for consumers in the 55 age group.
Determining the length of the rod : Suppose, you live in a place on the equator. There is a vertical rod of length 2m on your roof top. One morning, you went to the roof top and observed the shadow of the rod. If the length of the rod was 1m, then what time was that?
About the annual pretax cost savings : Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $390,000 is estimated to result in $150,000 in annual pretax cost savings.
Who ruled over babylon last era of greatness : Who ruled over Babylon's last era of greatness? During the sixteenth and seventeenth centuries, Japan was the world's leading producer of
Determine the total amount received from brook company : Given the following transactions engaged in by Fournier Company, prepare journal entries and, assuming the periodic inventory system, determine the total amount received from Brook Company.
Focuses on reducing time and cost and eliminating poor : focuses on reducing time and cost and eliminating poor quality is known as
New technologies are continuously improving : New technologies are continuously improving and replacing existing products.

Reviews

Write a Review

Financial Management Questions & Answers

  About their working capital management

Use the table below, summarized from CFO Magazine’s 2006 working capital survey to answer this question. Compare Genzyme’s CCC to that of Quest Diagnostics. What do the CCC for the two companies tell us about their working capital management?

  Difficulty refinancing debt in tight credit conditions

It is noted that initially, leverage can be the least expensive form of capital. However, if potential lenders feel a firm is overly leveraged, they may charge a punitive rate, or refuse to lend all together. This can be disastrous if a firm needs to..

  After successfully completing your corporate finance class

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. Schenkel has 385,000 shares outsta..

  Compute ms barths preparer penalty

Compute Ms. Barth's preparer penalty if the IRS concludes that: a. Ms. Barth had no reasonable legal basis for claiming the deduction and was not acting in good faith by doing so. b. Ms. Barth intentionally disregarded the tax law by claiming the ded..

  What constant annual interest rate were you earning

If you deposit $2,000 into a bank account at the end of each of the next 10 years and it has grown to $27,633, what constant annual interest rate were you earning?

  Nominal interest rate

If one-year nominal interest rate in the U.S. is 3%, while the one-year nominal interest rate in Australia is 5%. The spot rate of the Australian dollar is $.96. Interest Parity is held. You will need 5 million Australian dollars in one year. Today, ..

  How much would you pay today for an investment

How much would you pay today for an investment that provides you $100 each year for the next five years and $1,100 six years from now if the interest rate is 4.6%? Calculate your answer to the nearest penny.

  Calculate the present value of the streams of cash flow

With a 10% interest rate, calculate the present value of the following streams of cash flow. Suppose you deposit $100 at the end of each year for three years in an account paying 8%. What is the present value of the cash flow stream? (Equal Cash Flow..

  Demonstrate use of time value of money

Demonstrate Use of Time Value of Money (TVM) in a Personal or Workplace Setting - Learning tends to be richer and long lasting when you can define your own problems and background contexts.

  Develop their financial plans-forecasted financial statement

Why is planning, such as cash flow and revenue planning, so important to businesses? What are the necessary items that businesses must think about when they develop their financial plans and forecasted financial statements?

  What is the large cap risk premium given the returns

What is the large cap risk premium given the following returns?

  Sell or process further

Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $6 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $6 per liter o..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd