Question: A start-up company is considering purchasing new software that would be better able to track consumer preferences for their products. The equipment will cost $15,500

A start-up company is considering purchasing new software that would be

A start-up company is considering purchasing new software that would be better able to track consumer preferences for their products. The equipment will cost $15,500 and will increase annual cash inflow by $3,250 (year 1), $3,500 (Year 2) and $3,750 (year 3), $3,900 (year 4), and $4,100 (year 5). The useful life of the software is 5 years. The management team wants a 15% return on all investments. a. Compute the net present value (NPV) of this investment. (14 marks) b. Should the software be purchased according to NPV analysis? (1 mark)

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