Question: Your company is considering a new computer system that will initially cost $2 million. It will save $550,000 per year in inventory and receivables management

Your company is considering a new computer system that will initially cost $2 million. It will save $550,000 per year in inventory and receivables management costs. The system is expected to last for seven years and will be depreciated using 5-year MACRS. The system is expected to have a salvage value of $120,000 at the end of year 7. The system requires an initial investment in net working capital of $28,000. The marginal tax rate is 35%. The required return is 8%. what is the NPV for the project?

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!

JayC is considering a new computer system that will initially cost $1.2 million. It will save $300,000 per year in inventory and receivables management costs. The company spent $30,000 researching...

Your company is considering a new computer system that will initially cost $1 million. It will save $300,000 per year in inventory and receivables management costs. The system is expected to last for...

Your company is considering a new computer system that will initially cost $ 1 million. It will save $ 3 0 0 , 0 0 0 per year management costs. The system is expected to last for five years and will...

Your company is considering a new computer system that will initially cost $1 million. It will save $300,000 a year in management costs. The system is expected to last for five years and will be...

Al Falah Incorporated company is considering a new machinery system that will initially cost $1 million. It will save $300,000 per year in Inventory and warehousing costs. The system is expected to...

Question 14 7 Points Al Falah Incorporated company is considering a new machinery system that will initially cost $1 million. It will save $300,000 per year in invertory and warehousing costs. The...

XYZ Incorporated company is considering a new machinery system that will initially cost $1.5 million. It will save $500,000 per year in storing and warehousing costs. The system is expected to last...

Your company is considering a new computer system that will initially cost $1 million. 2. It will save $300,000 per year in inventory and receivables management costs. 3.The system is expected to...

If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to: Increase Decrease Remain the same Become zero

Describe conditions that favor kinetic polarization in an electrochemical cell.

What type of account is NOT managed in the Transactions centre? Question 3 options: chequing property, plant and equipment credit card lines of credit

a. Question 4 (20 marks) You are considering constructing a portfolio that consists of one risky (asset A) and one riskless asset. From the historical data you know that the standard deviation on...