Question

Cost-Cutting Proposals Geary Machine Shop is considering a four-yearproject to improve its production efficiency. Buying a...

Cost-Cutting Proposals
Geary Machine Shop is considering a four-yearproject to improve its production efficiency. Buying a new machine press for$480,000 is estimated to result in $180,000 in annual pretax cost savings. The pressfalls in the MACRS five-year class, and it will have a salvage value at the end of theproject of $70,000. The press also requires an initial investment in spare partsinventory of $20,000. along with an additional $3,000 in inventory for eachsucceeding year of the project. If the shop’s tax rate is 35 percent and its discountrate is 15 percent, should the company buy and install the machine press?
Not execel

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Since NPV is negative ,company should not buy and install the machine press.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,017,600 is estimated to result in $339,200 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $148,400. The press also requires an initial investment in spare parts inventory of $42,400, along with an additional $6,360 in inventory for each succeeding year...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,065,600 is estimated to result in $355,200 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $155,400. The press also requires an initial investment in spare parts inventory of $44,400, along with an additional $6,660 in inventory for each succeeding year...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,075,200 is estimated to result in $358,400 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $156,800. The press also requires an initial investment in spare parts inventory of $44,800, along with an additional $6,720 in inventory for each succeeding year...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $1,075,200 is estimated to result in $358,400 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $156,800. The press also requires an initial investment in spare parts inventory of $44,800, along with an additional $6,720 in inventory for each succeeding year...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $720,000 is estimated to result in $240,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $105,000. The press also requires an initial investment in spare parts inventory of $30,000, along with an additional $4,500 in inventory for each succeeding year...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $873,600 is estimated to result in $291,200 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $127,400. The press also requires an initial investment in spare parts inventory of $36,400, along with an additional $5,460 in inventory for each succeeding year...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $892,800 is estimated to result in $297,600 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $130,200. The press also requires an initial investment in spare parts inventory of $37,200, along with an additional $5,580 in inventory for each succeeding year...
Massey Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Massey Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $480,000 is estimated to result in $195,000 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 $81,000. The press also requires an initial investment in spare parts inventory of $21,000, along with an additional $2,600 in inventory for each succeeding year of the...
Problem 8-11 Cost-Cutting Proposals Blue Line Machine Shop is considering a four-year project to improve its...
Problem 8-11 Cost-Cutting Proposals Blue Line Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $560,000 is estimated to result in $235,000 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 $94,000. The press also requires an initial investment in spare parts inventory of $29,000, along with an additional $3,400 in inventory for...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new...
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $395,000 is estimated to result in $151,000 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 $51,000. The press also requires an initial investment in spare parts inventory of $22,000, along with an additional $3,200 in inventory for each succeeding year of the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT