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$425,000 is estimated to result in $169,000 in annual pretax costsavings. The press falls in the MACRS five-year class, and it willhave a salvage value at the end of the project of $69,000. Thepress also requires an initial investment in spare parts inventoryof $28,000, along with an additional $3,500 in inventory for eachsucceeding year of the project. The shop’s tax rate is 23 percentand its discount rate is 10 percent. (MACRS schedule)
Calculate the NPV of 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$425,000 is estimated to result in $169,000 in annual pretax costsavings. The press falls in the MACRS five-year class, and it willhave a salvage value at the end of the project of $69,000. Thepress also requires an initial investment in spare parts inventoryof $28,000, along with an additional $3,500 in inventory for eachsucceeding year of the project. The shop’s tax rate is 23 percentand its discount rate is 10 percent. (MACRS schedule)Calculate the NPV of this project.