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The President of Real Time has asked you to evaluate the proposed acquisition of a Bw computer. The computer cost's $40,000 and will be depreciated
The President of Real Time has asked you to evaluate the proposed acquisition of a Bw computer. The computer cost's $40,000 and will be depreciated using the following rates provided by the IRS. First year: 33%, second year 45%, third year 15% and fourth year 79. Purchasing the computer will require additional working capital of $3.000 Sales will increase by $20,000. Operating costs would increase by $6,000. Tax rate is 40%. Cost of capital is 14%. At the end of three years, the market value (selling price) of the computer is $2,000 a) (1 point) Compute initial cash outflow at to b) (1 point) Compute operational cash flow for years 1 through 3 e) pout) Computa after tax cash inflow from the sale of the computer at the and of the third year . (I pont) Compute NPV Should the computer be purchased? .) (1 pont) Compute RR Should the computer be purchased
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