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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 firm’srequired 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?

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Hubert Koch
Hubert KochLv2
28 Sep 2019

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