Virginia Tool Co. is considering an investment in a B2B system for purchasing office supplies and non-operating
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Question:
Virginia Tool Co. is considering an investment in a B2B system for purchasing office supplies and non-operating inputs. The project would require an initial investment of $400,000 and have an expected life of 6 years. The income is expected to be $95,000 in each of the first 4 years and $80,000 in each of the next 2 years. The company’s discount rate is 8 percent.
Required:
a. Calculate the payback period.
b. Calculate the NPV on the project.
c. Discuss whether this is acceptable.
Related Book For
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin
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