RightPrice Investors, Inc., is considering the purchase of a $367,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $67,000 in five years. The computer will replace 5 office employees whose combined annual salaries are $112,000. The machine will also immediately lower the firmâs required net working capital by $87,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 39 percent. The appropriate discount rate is 15 percent.
Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
| RightPrice Investors, Inc., is considering the purchase of a $367,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be $67,000 in five years. The computer will replace 5 office employees whose combined annual salaries are $112,000. The machine will also immediately lower the firmâs required net working capital by $87,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 39 percent. The appropriate discount rate is 15 percent. |
| Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Related questions
Market Top Investors, Inc., is considering the purchase of a$485,000 computer with an economic life of six years. The computerwill be fully depreciated over six years using the straight-linemethod, at which time it will be worth $132,000. The computer willreplace two office employees whose combined annual salaries are$98,000. The machine will also immediately lower the firmâsrequired net working capital by $87,000. This amount of net workingcapital will need to be replaced once the machine is sold. Thecorporate tax rate is 22 percent. The appropriate discount rate is8 percent. |
| Calculate the NPV of this project. (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) Is it worthwhile to buy the computer? |
