Question
The management of Kimco is evaluating replacing their large mainframe computer with a modern network system that requires much less office space. The network would
The management of Kimco is evaluating replacing their large mainframe computer with a modern network system that requires much less office space. The network would cost $505,090.00 (including installation costs) and due to efficiency gains, would generate $120,165.00 per year in operating cash flows (accounting for taxes and depreciation) over the next five years. The old mainframe has a remaining book value of $49,204.00 and would be immediately donated to a charity for the tax benefit. Kimcos cost of capital is 8.00% and the tax rate is 39.00%. What is the NPV for this project?
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