A new information system for CompuTechnoSoftTeleBizWare could be developed at a cost of $125,000. The initial cost, estimated net operating costs, and estimated net benefits over five years of operation are shown in Table 1. Note that year 0 is not a twelve-month period? it is the instant the project starts. 12% discount rate. What is the net present value of the investment? To the nearest month, when does this project achieve anon-negative NPV?

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Year Initial Cost $125,000 Annual Costs Annual Benefits 1 $3,500 $26,000 4,700 34,000 5,500 6,300 41,000 55,000 7,000 66,000 Table 1: Operating costs and benefits 2 34 5 Year Initial Cost $125,000 Annual Costs Annual Benefits 1 $3,500 $26,000 4,700 34,000 5,500 6,300 41,000 55,000 7,000 66,000 Table 1: Operating costs and benefits 2 34 5

Answer rating: 100% (QA)

Solution 1 Computation of Net present Value NPV PV factor Annual Net Cash ... View the full answer