D Question 7 Question 7 Smith's Computers is deciding whether to invest in prevention costs for its servers. Data regarding the decision between investing or not is as follows: Cost of Equipment Working capital investment required Annual Activity Annual Sales (assume all cash) Annual Cash Expenses Repair Costs Depreciation Maintenance Supplies Retooling costs of equipment at Salvage value of equipment Life of project Year 6 $ $ $ $ $ $ Invest in Prevention 150,000 $ 35,000 267,300 $ 165,000 11,250 $ 45,000 16,667 $ 30,000 55,000 ALA Do Not Invest $ $ 65,000 $ 3,000 $ 9 9 The working capital will be released for investment elsewhere at the end of the 9 years. Smith's Computers uses a 7% discount rate. (Ignore income taxes) Show all computations using the net present value format. Prepare separate computations for each project. Invest in Prevention, do not invest

Question 7 Smith's Computers is deciding whether to invest in prevention costs for its servers. Data smith's computers is deciding whether to invest in preventions or The working capital will be released for investment elsewhere at the end of the 9 years. Smith's Computers uses a \7 discount rate. (Ignore income taxes) Show all computations using the net present value format. Prepare separate computations for each project. invest in Prevention