Question: A software upgrade will lower annual costs by $450,000 per year. It will last 7 years before it becomes obsolete The initial cost for the

A software upgrade will lower annual costs by $450,000 per year. It will last 7 years before it becomes obsolete The initial cost for the software is $2,000,000 and it will require $10,000 of annual fees throughout its life. The software initially frees up net working capital by $25.000 as soon as you purchase it. However, at the end of its life the networking capital will be needed again. Hint. the NWC at the beginning is not the usual contribution"/use of cash. instead the software is "freeing up" net working capital. Your discount rate is 12% What is the NPV of this software upgrade

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!

A software upgrade will lower annual costs by $450,000 per year. It will last 7 years before it becomes obsolete. The initial cost for the software is $2,000,000 and it will require $10,000 of annual...

PowerPoint Assignment for BUS 401: Principles of Finance You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value...

INTRODUCTION Driving back to Knoxville on Friday afternoon, Morgan finally had some time to think. Shed spent most of the week in Nashville meeting with many of the Tennessee Valley Authoritys (TVA)...

Corporation is a manufacturer of smart boards and plans to purchase new equipment for its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing...

Work out question 3, information starts from the first page, the question is on top of the second page 2.2 2.1.1. Earnings Yield 2.1.2 Dividend Yield, 2.1.3. PE Ratio List four most important factors...

Cheetah Wheel & Alignment is considering the purchase or lease of a new state of the art wheel alignment machine for their premises in Brickfield Road, Overport, KwaZulu Natal. The business has 2...

[25] QUESTION THREE Cheetah Wheel & Alignment is considering the purchase or lease of a new state of the art wheel alignment machine for their premises in Brickfield Road, Overport, KwaZulu-Natal....

Ekhaya Construction Company, whose primary activity consists of building dams, bridges, and other civil works, has the opportunity to accept a new project that will add revenues of R50 000 000 per...

1. The company is now considering developing a new product for customers in their Telstra Consumer and Small Business segment. Development of the new product will initially require an initial capital...

Discuss the hierarchical nature of traditional structured design. What kinds of systems and architectures are naturally more inclined to a hierarchy?

A shaft of solid circular cross section consisting of two segments is shown in the first part of the figure. The left-hand segment has diameter 80 mm and length 1.2 m; the right-hand segment has...

What is a loan? Answer one drop down" A bond used to raise money by a company. Answer two drop down" A share of ownership in a business. Answer three drop down" Best Answer Money borrowed and owed to...

A Chapter 13 plan of reorganization may include all but which one of the following? a. Future wages must be controlled by the trustee. b. The rights of unsecured creditors may be modified. c....

6. Think of a situation where you noticed that the other person or people did not like or understand your behaviour. Examine your own intentions behind the behaviour.

2. In this chapter, the reader should reflect on the following concepts: historical reason, goal orientation, core values and top performance.

1. To understand how to set goals in a communication process