Question 1 (5 marks)

Bridgton Ltd. Is considering to adopt the Artificial Intelligence (AI) System with an economic life of five years, which costs initial investment of $680,000. The Artificial Intelligence System will be fully depreciated over five years using the straight-line depreciation method. The market value of AI system will be $80,000 in five years. By adopting the Artificial Intelligence System will replace eight office employees whose combined annual salaries are $336,000. The AIS launch will also immediately lower the firm's required net working capital by $100,000. And this amount of net working capital will be recovered at the end of the year five. The corporate tax rate is 34 percent. Please calculate the net present value of the project (AIS) if the appropriate discount rate is 12 percent.