Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $988,800 is estimated to result in $329,600 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table), and it will have a salvage value at the end of the project of $144,200. The press also requires an initial investment in spare parts inventory of $41,200, along with an additional $6,180 in inventory for each succeeding year of the project.
Required :
If the shop's tax rate is 35 percent and its discount rate is 17 percent, what is the NPV for this project?