Question: I need an answer ASAP! Peter is considering the purchase of a $500000 computer with an economic life of five years. the computer will be

I need an answer ASAP!

Peter is considering the purchase of a $500000 computer with an economic life of five years. the computer will be fully depreciated over five years using the straight-line method. The market value of the computer will be zero infuse years. The computer will replace five office employees whose combined annual salaries are $120000. The computer will also immediately lower the firms required net working capital by $100,000. This amount of net working capital will be needed again once the computer is out of service five years later. The corporate tax rate is 34percent. Is it worthwhile to buy the computer if the appropriate discount rate is 12 percent?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

1) C.M. Burns Enterprises, Inc. is considering investing in a machine to produce computer keyboards. The price of the machine will be $400,000 and its economic life five years. The machine will be...

Alice is considering the purchase of a $500,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The market value...

Sketchers Inc., is considering the purchase of a $500,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method. The...

Scott Investors, Inc. is considering the purchase of a $500,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method....

Calculating Project NPV Scott Investors, Inc., is considering the purchase of a $500,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the...

Scott Investors, Inc., is considering the purchase of a $$500,000$ computer that has an economic life of five years. The computer will be depreciated based on the system enacted by the Tax Reform...

7.8 Scott Investors, Inc., is considering the purchase of a $500,000 computer that has an economic life of five years. The computer will be depreciated based on the system enacted by the Tax Reform...

2) Kwik-E-Mart, Inc. is considering the purchase of a $500,000 computer that has an economic life of 5 years. The computer falls into the MACRS 5-year class and will be sold in 5 years for $100,000....

Kwik-E-Mart, Inc. is considering the purchase of a $500,000 computer that has an economic life of 5 years. The computer falls into the MACRS 5-year class and will be sold in 5 years for $100,000. The...

Delizzia, a family owned business, produces and delivers potato chips to supermarkets and mom & pop stores. Located in Buenos Aires, Argentina, Delizzia is planning to expand its operations to...

Compressed air coming out from a punctured football a. becomes hotter O b. remains at the same temperature O c. becomes cooler O

Select the best answer choice to complete each sentence. Group of answer choices The purchase of a house or a multifamily dwelling such as a duplex, triplex or apartment building is usually financed...

C++ (please help) This is Point 2D class code class Point2D { private: double x; double y; public: Point2D() { x = 0; y = 0; } Point2D(double xVal, double yVal) { x = xVal; y = yVal; } double getX()...