Question: Appen Ltd. is considering investing in a new data analytics software that costs $500,000. The new software will generate incremental revenues of $50,000 per year

Appen Ltd. is considering investing in a new data analytics software that costs $500,000. The new software will generate incremental revenues of $50,000 per year for twenty years. The cash operating costs needed to generate these revenues will total $5,000 per year. The software will be amortised on a straight-line basis over twenty years to zero. Appen Ltd.'s tax rate is 30 percent, and its cost of capital is 13 percent.

(a)What is the net present value of this project?

(b)Should the company approve this project? Explain why or why not.

(Show all of your calculation).

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