Starset Machine Shop is considering a 4-year project to improve its production efficiency. Buying a new...

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Starset Machine Shop is considering a 4-year project to improveits production efficiency. Buying a new machine press for $440,000is estimated to result in $178,000 in annual pretax cost savings.The press falls in the 5-year MACRS class, and it will have asalvage value at the end of the project of $72,000. The press alsorequires an initial investment in spare parts inventory of $31,000,along with an additional $3,650 in inventory for each succeedingyear of the project. The shop’s tax rate is 21 percent and itsdiscount rate is 12 percent. (MACRS schedule) Calculate the NPV ofthis project.
(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

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Initial Investment 440000 Useful Life 4 years Depreciation Year 1 2000 440000 Depreciation Year 1 88000 Depreciation Year 2 3200 440000 Depreciation Year 2 140800 Depreciation Year 3 1920 440000 Depreciation Year 3 84480 Depreciation Year 4 1152 440000 Depreciation Year 4 50688 Book Value at the end of Year 4 440000 88000 140800 84480 50688 Book Value See Answer

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Starset Machine Shop is considering a 4-year project to improveits production efficiency. Buying a new machine press for $440,000is estimated to result in $178,000 in annual pretax cost savings.The press falls in the 5-year MACRS class, and it will have asalvage value at the end of the project of $72,000. The press alsorequires an initial investment in spare parts inventory of $31,000,along with an additional $3,650 in inventory for each succeedingyear of the project. The shop’s tax rate is 21 percent and itsdiscount rate is 12 percent. (MACRS schedule) Calculate the NPV ofthis project.(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)