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Geary Machine Shop is considering a four-year project to improve its production efficiency

Finance

Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $835,200 is estimated to result in $278,400 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 $121,800. The press also requires an initial investment in spare parts inventory of $34,800, along with an additional $5,220 in inventory for each succeeding year of the project. Required: If the shop's tax rate is 33 percent and its discount rate is 19 percent, what is the NPV for this project? (Do not round your intermediate calculations.) $-143,553.81 $-140,192.59 $-215,807.14 $-150,731.50 $-136,376.12

2)

Consider an asset that costs $343,200 and is depreciated straight-line to zero over its 11-year tax life. The asset is to be used in a 8-year project; at the end of the project, the asset can be sold for $42,900.

  

Required :

If the relevant tax rate is 35 percent, what is the aftertax cash flow from the sale of this asset? (Do not round your intermediate calculations.)

$60,645.00

$418,287.00

$57,612.75

$27,885.00

$63,677.25

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