Question: please solve it without excel Q1) Fox Corporation is considering the purchase of a $500,000 a software system. It will depreciated straight line to zero
Q1) Fox Corporation is considering the purchase of a $500,000 a software system. It will depreciated straight line to zero over its 4 years life. It will be worth $50,000 at the end of that time. The system will save the company $100,000 before taxes in production-related cost. The relevant tax rate is 30%. Because of the new setup is more efficient than the existing one, the company can carry less inventory, thereby freeing up $60,000 in net working capital. What is the NPV at 12 percent? What is the IRR on this investment? Should the Company purchase the system or not? And why
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