CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a...
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CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $413,000 is estimated to result in $153,000 in annual pretax cost savings. The press is eligible for 100 percent bonus depreciation and it will have a salvage value at the end of the project of $54,000. The press also requires an initial investment in spare parts inventory of $15,900, along with an additional $2,900 in inventory for each succeeding year of the project. The shops tax rate is 24 percent and its discount rate is 11 percent. Calculate the project's NPV.
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