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| Teaching Since: | Apr 2017 |
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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $470,000 is estimated to result in $190,000 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 $80,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $2,500 in inventory for each succeeding year of the project. If the shop’s tax rate is 35% and its discount rate is 9 percent, should the company buy and install the machine press?
Fir-----------st,----------- we----------- wi-----------ll -----------cal-----------cul-----------ate----------- th-----------e d-----------epr-----------eci-----------ati-----------on -----------eac-----------h y-----------ear-----------, w-----------hic-----------h w-----------ill----------- be----------- D1-----------= $-----------470-----------,00-----------0*(-----------0.2-----------000-----------) =----------- $9-----------4,0-----------00 -----------D2=----------- $4-----------70,-----------000-----------*(0-----------.32-----------00)----------- = -----------$15-----------0,4-----------00 -----------D3=----------- $4-----------70,-----------000-----------*(0-----------.19-----------20)-----------