Within the business sector, there are dozens of types of debt securities and there are several different markets for common stocks. There is a price for each type of capital, and these prices change over time as supply and demand conditions change.
August 24, 2020
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August 24, 2020

Cost-Cutting Proposals. Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for…

1. Cost-Cutting Proposals. Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $560,000 is estimated to result in $210,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $80,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $3,000 in inventory for each succeeding year of the project. If the shop’s tax rate is 35 percent and its discount rate is 9 percent, should the company buy and install the machine press?

 

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Cost-Cutting Proposals. Geary Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for… was first posted on August 24, 2020 at 1:04 pm.
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