Second cup is thinking about buying a new $445,000 automated inventory sorting system. The system will be depreciated straight-line to zero over its 5-year life which will be worth $53,000 at the end of 5-year. The firm will save $139,000 before taxes per year in inventory management costs and the system requires an initial investment in net working capital of $25,000. If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project?

Answer rating: 100% (QA)

To calculate the NPV Net Present Value of the project we need to consider the cash flows associated ... View the full answer