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Market Top Investors, Inc., is considering the purchase of a $385,000 computer with an economic life of five years. The computer will be fully depreciated
Market Top Investors, Inc., is considering the purchase of a $385,000 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 $30,000. The computer will replace two office employees whose combined annual salaries are $90,000. The machine will also immediately lower the firm's required net working capital by $70,000. 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. A negative amount should be indicated by a minus sign.) NPV Is it worthwhile to buy the computer? O Yes O No
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