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Gola Computers is feciding whether to invest in prevention costs for its servers. Data regarding the decision between investing or not is as follows
Gola Computers is feciding whether to invest in prevention costs for its servers. Data regarding the decision between investing or not is as follows Invest Do in Prevention Not Invest Cost of Equipment 150,000 $ Working capital investment required S 35.000 Annual Activity. Annual Sales (assume all cash) 267.300 $ 165,000 Annual Cash Expenses Repair Costs S 11,250 $ 45,000 Depreciation $ 16,667 5 Maintenance $ 30,000 $ Supplies $ 55,000 $ Year Retooling costs of equipment at $ 65,000 $ 6 Salvage value of equipment $ 3,000 $ Life of project 9 9 The working capital will be released for investment elsewhere at the end of the 9 years. Gola Computers uses a 7% discount rate. Required: (Ignore income taxes) Show all computations using the net present value format. Prepare separate computations for each project.
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