-Chapman Machine Shop Is Considering a 4-Year Project to Improve

question 44

Multiple Choice

-Chapman Machine Shop is considering a 4-year project to improve its production efficiency.Buying a new machine press for $576,000 is estimated to result in $192,000 in annual pretax cost savings.The press falls in the MACRS 5-year class,and it will have a salvage value at the end of the project of $84,000.The press also requires an initial investment in spare parts inventory of $24,000,along with an additional $3,600 in inventory for each succeeding year of the project.The inventory will return to its original level when the project ends.The shop's tax rate is 35 percent and its discount rate is 11 percent.Should the firm buy and install the machine press? Why or why not?

• A) no;The net present value is -$7,489.
• B) no;The net present value is -$667.
• C) yes;The net present value is $211.
• D) yes;The net present value is $4,319.
• E) yes;The net present value is $8,364.

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Individuals whose net worth or wealth is equal to or exceeds one million units of currency.

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The total amount of money that an individual has saved over their lifetime, often used in the context of retirement or emergency funds.

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A state of well-being and contentment; the feeling of positive emotions.

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A stage in adult development typically characterized by employment and productivity, often occurring between the ages of 40 and 65.