Problem $2(10$ marks$)$

The law firm of $xYZ$ Inc. is considering investing in a complete small business computer

system. The initial investment will be $$35,000$ for the hardware, which will be used for

$10$ years with a salvage value of $$5,000,$ and software of $$20,000.$ During the $10$ years

that the system is in use, an additional $$5,000$ per year will be spent for additional

software. Software has a CCA rate of $45\%.$

The computer system is expected to provide additional revenue of $$15,000$ per year for

the next $10$ years. The firm's cost of capital is $12$ percent and its tax rate is $40$ percent.

Using net present value analysis, should this investment be accepted?