Compute the net after-tax cash flows from this investment

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Reference no: EM1375374

The law firm of abc is seeing investing in complete small business computer system. The initial investment will be $35,000 the computer is in the 5-year straight line category and the firm's tax rate is 34%. The computer system is expected to deliver additional revenue of $15,000 per year for the next six years and to reduce expenses by $10,000 per year for the same period.

(a) Compute the net after-tax cash flows from this investment.

(b) Compute the net present value of the system that the law firm's weighted average cost of capital is 12%.

Reference no: EM1375374

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