Question: Alexa Industries is considering entering the cloud computing business running software specifically for storage unit management. The necessary hardware and software for the project is

Alexa Industries is considering entering the cloud computing business running software specifically for storage unit management. The necessary hardware and software for the project is estimated to cost $2,000,000 with an additional $500,000 for installation and configuration. $100,000 in additional working capital would also be required. Management anticipates added revenues of $1,200,000 per year and expenses of $300,000 per year for the duration of the five year project. The equipment and software would be depreciated straight-line over its five year life and would have an estimated salvage value of $200,000 at the end of five years. Given the firm's tax rate of 25% and required rate of return of 12%, what is the project's NPV? 587,859.75 0 505.080,45 425,677.68 O 389,474.99

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