Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Nata, Inc., is considering the purchase of a $413,000 computer with an economic life of five years. The computer will be fully depreciated over five

image text in transcribed

Nata, Inc., is considering the purchase of a $413,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $77,000 in five years. The computer will replace 5 office employees whose combined annual salaries are $122,000. The machine will also immediately lower the firm's required net working capital by $97,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 39 percent. The appropriate discount rate is 13 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your final 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

More Books

Students also viewed these Finance questions

Question

What is capacity management?

Answered: 1 week ago

Question

Influences on Nonverbal Communication?

Answered: 1 week ago