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Mack and Myer, LLP, a law firm, is considering the replacement of its old accounting system with new software that should save $10,000 per year
Mack and Myer, LLP, a law firm, is considering the replacement of its old accounting system with new software that should save $10,000 per year in net cash operating costs. The old system has zero disposal value, but it could be used for the next 5 years. The estimated useful life of the new software is 5 years with zero salvage value, and it will cost $40,000. The required rate of return is 14%. What is the payback period? Compute the NPV. Management is unsure about the useful life. What would be the NPV if the useful life were (a) 3 years instead of 5 or (b) 10 years instead of 5? Suppose the life will be 5 years, but the savings will be $8,000 per year instead of $10,000. What would be the NPV? Suppose the annual savings will be $9,000 for 4 years. What would be the NPV
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