Your company is considering a new computer system that will initially cost $1 million. It will save $400,000 a year in inventory and receivables management costs. The system is expected to last for five years and will be depreciated using 3-year MACRS. The system is expected to have a salvage value of $50,000 at the end of year 5. The project will require an initial $20,000 investment in net working capital and the marginal tax rate is 40%. The required return is 8%. 0 OCF NCS NWC CFFA Year 1 $373,320 - $ 1,000,000 $ 20,000 - $1,020,000 $373,320 2 ($ ® ) What is the correct vaule for blank? ($ ® ) 3 $299,280 4 5 $269,640 $ 240,000 ($) ($ @ ) ($ ® ) $299,280 $ 269,640 With all this, the NPV of the project is ($). Therefore, this project should be accepted.
Your company is considering a new computer system that will initially cost $1 million. It will save $400,000 a year in inventory and receivables management costs. The system is expected to last for five years and will be depreciated using 3-year MACRS. The system is expected to have a salvage value of $50,000 at the end of year 5. The project will require an initial $20,000 investment in net working capital and the marginal tax rate is 40%. The required return is 8%. 0 OCF NCS NWC CFFA Year 1 $373,320 - $ 1,000,000 $ 20,000 - $1,020,000 $373,320 2 ($ ® ) What is the correct vaule for blank? ($ ® ) 3 $299,280 4 5 $269,640 $ 240,000 ($) ($ @ ) ($ ® ) $299,280 $ 269,640 With all this, the NPV of the project is ($). Therefore, this project should be accepted.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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