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Medtronic would like to spend $130,000 on a new computer for controlling inventory within their warehouse. It will save them $35,000 per year in operating
Medtronic would like to spend $130,000 on a new computer for controlling inventory within their warehouse. It will save them $35,000 per year in operating expenses. They plan to use the computer for six years after which they expect to be able to sell it for 10% of the original purchase price. The computer will be depreciated using MACRS as 5-year property. The MARR is 18%. Assume a 50% tax rate, and 0% inflation, and perform an after tax analysis. Use NPW analysis to determine if this is a good investment.
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