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please answer question 2 Real Time, Inc. The president of Real Time, Inc. has asked you to evaluate the proposed acquisition of a new computer.
please answer question 2
Real Time, Inc. The president of Real Time, Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $40,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $5,000. The computer would increase the firm's before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 3 years and then be sold for $30,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent. Refer to Real Time, Inc. What is the total value of the terminal year non-operating cash flows at the end of Year 3? a. $27,120 b. $21,120 c. $18,120 d. $24,120 1. e. $26,120Step by Step Solution
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