Calculate the net cash flows and the npv

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Golden Opportunities, a not-for-profit community association, is considering the proposed acquisition of a new training and education software system. The price of the software system is $500,000, and it has a life expectancy of 7 years. The system will be sold at the end of the life span, with salvage value of $175,000. While this new system will have no impact on the number of training sessions or reimbursement, it is however expected to save the association $5,000 per year in operating costs. On average, the instructors train 25 people per day for 235 days per year. Training materials cost approximately $15 per person. Grant funding provides reimbursement of $80 for each training session (per person registered). Year one expenses include instructor labor ($75,000), building operations (rent and utilities of $40,000 and $20,000 respectively), and overhead of $5,000. Costs increase by 5% annually. Revenues increase by 7% annually. The cost of capital is 10%. Calculate the net cash flows and the NPV.

Reference no: EM132043574

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