The Spartan Technology Company has a proposed contract with the Digital Systems Company of Michigan. The Initial Investment In

land and equipment will be $$300,000.$ Of thls amount, $$240,000$ is subject to five$-$year MACRS depreclation. The balance is in

nondepreclable property. The contract covers slx years; at the end of six years, the nondepreclable assets will be sold for $$60,000.$

The depreclated assets will have zero resale value. Use Table $12-12.$ Use Appendix B for an approximate answer but calculate your

final answer using the formula and financial calculator methods.

The contract will require an additional investment of $$57,000$ in working capital at the beginning of the first year and, of this amount,

$$37,000$ will be returned to the Spartan Technology Company after six years.

The Investment will produce $$85,000$ in Income before depreciation and taxes for each of the slx years. The corporation is in a $25$

percent tax bracket and has a $8$ percent cost of capital.

a$.$ Calculate the net present value.

Note: Do not round Intermedlate calculatlons and round your answer to $2$ decimal places.

b$.$ Should the Investment be undertaken?

Yes

No