Calculate the npv of project

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Reference no: EM131015478

Warmack machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for 480,000 dollors is estimated to result in 195,000 dollors 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 81,000 dollors. The press also requires an initial investment in spare parts inventory of 21,000, along with an additional 2,600 dollors in inventory for each succeeding year of the project. The shop's tax rate is 30 percent and its discount rate is 8 percent.

MACRS Schedule

Calculate the NPV of this project.

Should the company buy and install the machine press?

Reference no: EM131015478

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