Question: 3 . A computer system can be purchased for $ 9 0 , 0 0 0 with an additional $ 1 0 , 0 0
A computer system can be purchased for $ with an additional $ required for installation. It is expected to last for five years, with a $ salvage value at that time. It will be depreciated for income tax purposes using the straightline method. The net value added revenues less expenses that can be attributed to the machine is expected to be $ each year. The company will have to borrow $ of the capital needed, and plans to pay the loan back over years using equal annual payments. The loan interest rate is compounded annually. An effective income tax rate of is used by the company and the aftertax MARR is per year. What is the aftertax cash flow for each year? What is the aftertax net present value of this investment?
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