6. A computer manufacturing company wants to determine if manufacturing a new type of computer is going to be feasible. To undertake the project it is estimated to cost $300,000. It is expected that they will make $100,000 each year from the sale of this product. Maintenance and repair costs are expected to be around $12,000 each year. The salvage value of the equipment is around $50,000 and expected to only last 4 years. Shareholders required rate of return is 10%. What is the NPV and benefit cost ratio (PI) of the project? Should the company manufacture a new type of computer?

Answer rating: 100% (QA)

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