Question
50. Best Books and More, a retail book store, is considering the purchase of a new computer system. The firm now intends to offer its
50. Best Books and More, a retail book store, is considering the purchase of a new computer system. The firm now intends to offer its customers on-line access to e-Books in its extensive inventory. The computer system had an initial cost of $356,000. It is expected to generate the following after-tax cash flow values for the next five years:
Year | Amount |
1 | $98,000 |
2 | 140,500 |
3 | 250,000 |
4 | 262,750 |
5 | 169,000 |
The Weighted Average Cost of Capital (WACC) for Best Books and More is 10%. Based on this information, what is the Net Present Value (NPV) of the proposed computer system?
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