PLEASE HELP ME WITH THIS QUESTION THANKS!!
eEgg is considering the purchase of a new distributed network computer system to help handle its warehouse inventories. The system costs $40,000 to purchase and install and $23,000 to operate each year. The system is estimated to be useful for 4 years. Management expects the new system to reduce the cost of managing inventories by $44,000 per year. The rm's cost of capitai {discount rate} is 12%. Required: '1. What is the net present value {NW} of the proposed investment under each of the following independent situations? {Use the appropriate present value factors from Appendix C, TABLE 1 and Appendix C, TABLE 2.] 'la- The rm is not yet protable and therefore pays no income taxes. 'lb. The rm is in the 25% income tax bracket and uses straight-line {SLN} depreciation with no salvage vaiue. Assume MACRS rules do not apply. 'tc- The rm is in the 25% income tax bracket and uses double-decliningbaiance {DOB} depreciation with no salvage value. Given a fouryear life, the DOB depreciation rate is 50% [i.e., 2 X 25%}. In year tour, record depreciation expense as the net book value {NBV} of the asset at the start of the year. 2. What is the internal rate of return {lRR} of the proposed investment for situations in requirement 1. parts (a) through {c}? Use .he IRR buiiitin function in Excel to compute the IRR. 0 Answer is not mnplete- mlee this question by' ermeringyounansilors in the \"labs below! ' Reg 1A H RBI] IB Reg 1C I Reg 2 ' The rm is in the-25%. income taxbraclrel'. and uses double-declining-balanoe {DDS} depreciation with no salvage value. Given a fourIy'ealr life, the DDBdeprec'ration rate is 50% (i.e., 2 X 25%). In year four, record depreciation expense as the net book value (NEH) of the asset at thesliri'tofthe year. (Negative amounts should be indicated by a minus sign. Round dISmunt factor to '3 decimal places and other answers to the nearest whole dollar amount.) I Show less; 0.120 0 5 {40,000} 2490000 9 13,200 9 2190.000 0 15,050 0 2040.000 9 2040.000 6 Net present value {NPV} balmh: (5,600)