Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...

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Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$1,113,600 is estimated to result in $371,200 in annual pretax costsavings. The press falls in the MACRS five-year class (MACRSTable), and it will have a salvage value at the end of the projectof $162,400. The press also requires an initial investment in spareparts inventory of $46,400, along with an additional $6,960 ininventory for each succeeding year of the project. If the shop'stax rate is 25 percent and its discount rate is 8 percent, what isthe NPV for this project?

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Masters Machine Shop is considering a four-year project toimprove its production efficiency. Buying a new machine press for$1,113,600 is estimated to result in $371,200 in annual pretax costsavings. The press falls in the MACRS five-year class (MACRSTable), and it will have a salvage value at the end of the projectof $162,400. The press also requires an initial investment in spareparts inventory of $46,400, along with an additional $6,960 ininventory for each succeeding year of the project. If the shop'stax rate is 25 percent and its discount rate is 8 percent, what isthe NPV for this project?