Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Market Top Investors, Inc., is considering the purchase of a $330,000 computer with an economic life of five years. The computer will be fully depreciated

image text in transcribed

Market Top Investors, Inc., is considering the purchase of a $330,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method, at which time it will be worth $42,000. The computer will replace two office employees whose combined annual salaries are $83,000. The machine will also immediately lower the firm's required net working capital by $72,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 22 percent. The appropriate discount rate is 9 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Core Concepts

Authors: Raymond M Brooks

3rd edition

133866696, 978-0133866698

More Books

Students also viewed these Finance questions