A software upgrade will lower annual costs by $450,000 per year. It will last 7 years before it becomes obsolete. The initial cost for the software is $2,000,000 and it will require $10,000 of annual fees throughout its life. The software initially frees up net working capital by $25,000 as soon as you purchase it. However, at the end of its life the net working capital will be needed again. Hint: the NWC at the beginning is not the usual contribution/use of cashinstead the software is freeing up net working capital. Your discount rate is 12%. What is the NPV of this software upgrade?

• 23,964

• 36,479

• -4,368

• -16,489

• 21,744