Motion Metrics is considering a four-year project to improve its production efficiency. Buyling a new production equipment for$411,000is estimated to resut in$151,000in annual pre-tax cost savings. The equipment falls into Class 8 for CCA purposes (CCA rate of20%per year), and it will have a salvage value at the end of the project of$55,100. The project also requires an initial investment in spare parts inventory of$21,000, along with an additional$3,200in inventory for each succeeding year of the project. If the firm's tax rate is35%ond its discount rate is9%Calculate the NPV of this project (Do not round your intermediate calculations. Round the final onswer to 2 decimal places. Omit$sign in your response.) NPV

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Motion Metrics is considering a four-year project to improve its production efficiency. Buyling a new production equipment for$411,000is estimated to resut in$151,000in annual pre-tax cost savings. The equipment falls into Class 8 for CCA purposes (CCA rate of20%per year), and it will have a salvage value at the end of the project of$55,100. The project also requires an initial investment in spare parts inventory of$21,000, along with an additional$3,200in inventory for each succeeding year of the project. If the firm's tax rate is35%ond its discount rate is9%Calculate the NPV of this project (Do not round your intermediate calculations. Round the final onswer to 2 decimal places. Omit$sign in your response.) NPV
Motion Metrics is considering a four-year project to improve its production efficiency. Buying a new production equipment for $411,000
is estimated to result in $151,000 in annual pre-tax cost savings. The equipment falls into Class 8 for CCA purposes (CCA rate of 20%
per year), and it will have a salvage value at the end of the project of $55,100. The project also requires an initial investment in spare
parts inventory of $21,000, along with an additional $3,200 in inventory for each succeeding year of the project. If the firm's tax rate is
35% and its discount rate is 9%
Calculate the NPV of this project. (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omnit $
sign in your response)
NPV
Transcribed Image Text:Motion Metrics is considering a four-year project to improve its production efficiency. Buying a new production equipment for $411,000 is estimated to result in $151,000 in annual pre-tax cost savings. The equipment falls into Class 8 for CCA purposes (CCA rate of 20% per year), and it will have a salvage value at the end of the project of $55,100. The project also requires an initial investment in spare parts inventory of $21,000, along with an additional $3,200 in inventory for each succeeding year of the project. If the firm's tax rate is 35% and its discount rate is 9% Calculate the NPV of this project. (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omnit $ sign in your response) NPV
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