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A)

Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $509885 is estimated to result in $206540 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 $91777. The shop's tax rate is 34 percent. What is the OCF for year 4? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)

Modified ACRS Depreciation Allowances (Table 10.7)
Year	Three-Year	Five-Year	Seven-Year
1	33.33%	20.00%	14.29%
2	44.45	32.00	24.49
3	14.81	19.20	17.49
4	7.41	11.52	12.49
5		11.52	8.93
6		5.76	8.92
7			8.93
8			4.46

B)

Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $534819 is estimated to result in some amount of annual pretax cost savings. The press will have an aftertax salvage value at the end of the project of $85560. The OCFs of the project during the 4 years are $173439, $195137, $176990 and $166535, respectively. The press also requires an initial investment in spare parts inventory of $23957, along with an additional $1751 in inventory for each succeeding year of the project. The shop's discount rate is 9 percent. What is the NPV for this project? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)

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