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Calculate npv for the new computer system

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Reference no: EM132607472

ABC Corporation estimates that if it invests $200,000 in a new computer system, it can save $65,000 in annual operating costs. The computer system has an expected useful life of five years and terminal disposal value. The required rate of return is 15%.

Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.

Required:

Question 1) Calculate Payback Period

Question 2) IRR and

Question 3) NPV for the new computer system

Reference no: EM132607472

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