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Category > Business & Finance Posted 07 Jun 2017 My Price 11.00

Warmack Machine Shop is considering a four-year project to improve

Warmack Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $510,000 is estimated to result in $210,000 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 $86,000. The press also requires an initial investment in spare parts inventory of $24,000, along with an additional $2,900 in inventory for each succeeding year of the project. The shopAc€?cs tax rate is 30 percent and its discount rate is 8 percent.

Calculate the NPV of this project.

So far I have the following calcuation but it is marking it as incorrect.

I also tried using the inventory cost as an expense. Also marked incorrect. See below.

 

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Status NEW Posted 07 Jun 2017 07:06 AM My Price 11.00

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