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Homework answers / question archive / Purple Haze Machine Shop is considering a four-year project to improve its production efficiency
Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $534,819 is estimated to result in some amount of annual pretax cost savings. The press will have an aftertax salvage value at the end of the project of $85,560. The OCFs of the project during the 4 years are $173,439, $195,137, $176,990 and $166,535, respectively. The press also requires an initial investment in spare parts inventory of $23,957, along with an additional $1,751 in inventory for each succeeding year of the project. The shop's discount rate is 9 percent. What is the NPV for this project? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)
