QUESTION
110. Boyertown Industrial Tools is considering a 3-year project to improve its production efficiency. Buying a new machi
Category: Business
Subject: Finance
Due Date: 02/03/2016
Question Asked: 2016-02-03 03:36:22
Asked by:
User: LightspeedLearning
Rating: No Rating (0)
Earnings: $1.10
Questions: 369
Tutorials: 369
Send me a message
110. Boyertown Industrial Tools is
considering a 3-year project to improve its production efficiency. Buying a new
machine press for $611,000 is estimated to result in $193,000 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 $162,000. The press also requires an
initial investment in spare parts inventory of $19,000, along with an
additional $2,000 in inventory for each succeeding year of the project. If the
tax rate is 35 percent and the discount rate is 12 percent, should the company
buy and install the machine press? Why or why not?
Table 9.7 Modified ACRS depreciation allowances
A. Yes; the NPV is $51,613
B. Yes: the NPV is $45,607
C. No; the NPV is -$22,311
D. No; the NPV is -$52,918
E. No; the NPV is -$74,945
AVAILABLE ANSWERS
110. Boyertown Industrial Tools is considering a 3-year project to improve its production efficiency. Buying a new machi
This answer hasn't been purchased yet.
Posted on 2016-02-03 03:36:22
Posted by:
User: LightspeedLearning
Rating: No Rating (0)
earnings: $1.10
Questions: 369
Tutorials: 369
Send me a message
Preview:
...imated to result in $193,000 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 ...
The full tutorial is about 143 words long.