Market Top Investors, Incorporated, is considering the purchase of a $345, 000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight - line method, at which time it will be worth $78, 000. The computer will replace two office employees whose combined annual salaries are $89, 000. The machine will also immediately lower the firm's required net working capital by $78, 000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 23 percent. The appropriate discount rate is 11 percent. Calculate the NPV of this project
Market Top Investors, Incorporated, is considering the purchase of a $345, 000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight - line method, at which time it will be worth $78, 000. The computer will replace two office employees whose combined annual salaries are $89, 000. The machine will also immediately lower the firm's required net working capital by $78, 000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 23 percent. The appropriate discount rate is 11 percent. Calculate the NPV of this project
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter21: Costs And The Supply Of Goods
Section: Chapter Questions
Problem 17CQ
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Market Top Investors, Incorporated, is considering the purchase of a $345, 000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight - line method, at which time it will be worth $78, 000. The computer will replace two office employees whose combined annual salaries are $89, 000. The machine will also immediately lower the firm's required net working capital by $78, 000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 23 percent. The appropriate discount rate is 11 percent. Calculate the NPV of this project
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