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Purple Haze Machine Shop is considering a four-year project to enhance its production efficiency. Buying a new machine press for $520,000 is evaluated to result in $215,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it can have a salvage value at the end of the project of $87,000. The press also needs an initial investment in spare parts inventory of $25,000, along with an additional $3,000 in inventory for each following year of the project. The shop's tax rate is 34 % and its discount rate is 10%.

Determine the NPV of this project.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M9133434

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