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John's Software firm is considering the purchase of computer that has an economic life of 4 years and it is expected to have no salvage
John's Software firm is considering the purchase of computer that has an economic life of 4
years and it is expected to have no salvage value .It will cost $ 100,000and it will be
depreciated using the straight line depreciation method .It will save the company $ 40,000the first year and it is assumed thar the savings after that will have a growth rate of 5% .It will reduce net working capital requirements by $ 10,000.The corporate tax rate is 40% and theappropriate discount rate is 14% .What is the value that the purchase will add to the firm ?
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