3) You are thinking of signing up for cloud storage online that will be save you...
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3) You are thinking of signing up for "cloud storage" online that will be save you $3,800 in physical storage space for 4 years. The cost of signing up is a one-time fee of $8,000 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 40%. 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? 3) You are thinking of signing up for "cloud storage" online that will be save you $3,800 in physical storage space for 4 years. The cost of signing up is a one-time fee of $8,000 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 40%. 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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