Calculate the NPV associated with this capital budgeting decision.

Question 5 options:

	$-5,914
	$1,873
	$1,896
	$2,027
	$1,793

Tormatio question Wright Co. is considering the purchase of a recently introduced, technologically superior computer to replace their old computer. The original cost of the old computer was $35,000; it is now three years old and has a market value of $10,000. It is being depreciated using the MACRS 3-yr. class life. It can be used for three more years at which time it will have a market value of $1,000. Management is contemplating the purchase of a computer whose cost is $30,000 with a useful life of 3 years and whose estimated market value at the end of three years is $2,000. The new computer will increase inventories by $1,500, decrease accounts receivable, accounts payable, and accruals by $1,000 each. Sales are expected to increase by $5,000 and costs are expected to decrease by $5,000 per year. The new computer will be depreciated using a MACRS 3-yr. class life. The cost of capital is 9%. The marginal tax rate is 36%. Use the following 3-Year MACRS Schedule Year 1 2 3 4 Dep Rate 33% 45% 15% 7% Tormatio question Wright Co. is considering the purchase of a recently introduced, technologically superior computer to replace their old computer. The original cost of the old computer was $35,000; it is now three years old and has a market value of $10,000. It is being depreciated using the MACRS 3-yr. class life. It can be used for three more years at which time it will have a market value of $1,000. Management is contemplating the purchase of a computer whose cost is $30,000 with a useful life of 3 years and whose estimated market value at the end of three years is $2,000. The new computer will increase inventories by $1,500, decrease accounts receivable, accounts payable, and accruals by $1,000 each. Sales are expected to increase by $5,000 and costs are expected to decrease by $5,000 per year. The new computer will be depreciated using a MACRS 3-yr. class life. The cost of capital is 9%. The marginal tax rate is 36%. Use the following 3-Year MACRS Schedule Year 1 2 3 4 Dep Rate 33% 45% 15% 7%