Your Vice President for MIS informs you that she has researched the possibility of automating your organizations

Question:

Your Vice President for MIS informs you that she has researched the possibility of automating your organization’s order-entry system. She has projected that the new system will reduce labor costs by $30,000 each year over the next five years. The purchase price (including installation and testing) of the new system is $110,000.

What is the Net Present Value of this investment if the discount rate is 10% per year?

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...