Question
You are thinking of signing up for cloud storage online that will be save you $4000 in physical storage space for 4 years. The
You are thinking of signing up for "cloud storage" online that will be save you $4000 in physical storage space for 4 years. The cost of signing up is a one-time fee of $10,000 today. In addition, there is yearly cost of $1000 for the storage space. The cloud will reduce working capital by 15% of the amount of savings each year. Your company's tax rate is 30%. The real rate of interest is 4% and inflation in the economy is projected to be 3%. What is the NPV of the project with and without inflation? Would you accept it?
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