Question: EE printing is in the evaluation process for the acquisition of a new computer system. The total depreciable base (cost plus installation) is $180,000. The

EE printing is in the evaluation process for the acquisition of a new computer system. The total depreciable base (cost plus installation) is $180,000.

The new equipment will increase Earnings before depreciation and taxes by $60,000 during years 1 to 3 and $32,000 during years 4 to 6.

EE marginal tax rate is 40% and Cost of Capital is 11%

Based on Net Present Value, is the acquisition of the equipment a good investment?

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