Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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1. Your company is considering a new computer system initially costing $1.25 million. It will save $400,000 per 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 $25,000 at the end of year 5. There is no impact on
net working capital. The marginal tax rate is 21 %. The required return is 9%. Calculate the NPV and IRR for the project.
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Transcribed Image Text:1. Your company is considering a new computer system initially costing $1.25 million. It will save $400,000 per 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 $25,000 at the end of year 5. There is no impact on net working capital. The marginal tax rate is 21 %. The required return is 9%. Calculate the NPV and IRR for the project.
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