-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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Definitions:

Visible Spectrum

The portion of the electromagnetic spectrum that is visible to the human eye, typically encompassing wavelengths from about 380nm to 750nm.

Saturation

The degree to which a color is pure, intense, or vivid; in psychology, it can also refer to the maximum degree of a feeling or quality.

Hue

A color or shade, representing the aspect of color which is determined by the wavelength of light.

Color Names

Labels given to specific wavelengths of visible light perceived by the eyes, aiding in their identification and classification.