Question
Market Top Investors, Incorporated, is considering the purchase of a $425,000 computer with an economic life of five years. The computer will be fully depreciated
Market Top Investors, Incorporated, is considering the purchase of a $425,000 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 $35,000. The computer will replace two office employees whose combined annual salaries are $95,000. The machine also will immediately lower the firms required net working capital by $40,000. 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. (A negative answer should be indicated by a minus sign. 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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started