Question

A manager of the engineering department of Manchester University is contemplating acquiring 120 computers. The computers will cost £240,000 cash, have zero terminal salvage value, and a useful life of 3 years. Annual cash savings from operations will be £110,000. The required rate of return is 14%. There are no taxes.
1. Compute the NPV.
2. Should the engineering department acquire the computers? Explain.



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  • CreatedNovember 19, 2014
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