Corporation ABC is considering a four-year project to improve its production efficiency. Buying a new machine press for
Posted: Sun May 29, 2022 6:09 pm
Corporation ABC is considering a four-year project to improve
its production efficiency. Buying a new machine press for $560,000
is estimated to result in $210,000 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 $80,000. The press also
requires an initial investment in spare parts inventory of $20,000,
along with an additional $3,000 in inventory for each succeeding
year of the project. If the company’s tax rate is 35 percent and
its discount rate is 9 percent, should the company buy and install
the machine press? MACRS Rates: 20%, 32%, 19.20%, 11.52%
using excel please
its production efficiency. Buying a new machine press for $560,000
is estimated to result in $210,000 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 $80,000. The press also
requires an initial investment in spare parts inventory of $20,000,
along with an additional $3,000 in inventory for each succeeding
year of the project. If the company’s tax rate is 35 percent and
its discount rate is 9 percent, should the company buy and install
the machine press? MACRS Rates: 20%, 32%, 19.20%, 11.52%
using excel please