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How to solve Tanaka Machine Shop is considering a four-year project to...

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Finance

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Tanaka Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $485,000 is estimated to result in $205,000 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 $74,000.(MACRS schedule) The press also requires an initial investment in spare parts inventory of $40,000, along with an additional $4,100 in inventory for each succeeding year of the project. The shop's tax rate is 25 percent and its discount rate is 8 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.)
NPV
Should the company buy and install the machine press?
No
Yes
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