Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

RightPrice Investors, Inc., is considering the purchase of a $369,000 computer with an economic life of four years. The computer will be fully depreciated over

image text in transcribed

RightPrice Investors, Inc., is considering the purchase of a $369,000 computer with an economic life of four years. The computer will be fully depreciated over four years using the straight-line method. The market value of the computer will be $69,000 in four years. The computer will replace 4 office employees whose combined annual salaries are $114,000. The machine will also immediately lower the firm's required net working capital by $89,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 34 percent. The appropriate discount rate is 13 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) Is it worthwhile to buy the computer? Yes No

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_2

Step: 3

blur-text-image_3

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

Public Finance And Public Policy

Authors: Arye L. Hillman

2nd Edition

0521738059, 978-0521738057

More Books

Students also viewed these Finance questions

Question

9. Describe the characteristics of power.

Answered: 1 week ago

Question

3. Identify and describe nine cultural value orientations.

Answered: 1 week ago