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Determine the incremental cash flows

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Reference no: EM132420965

You calculated the Net Present Value (NPV) of a project to be $5,000. You realize that you forgot to include cash flflows of a computer you need for the project. You will buy the computer immediately for $2,000. The computer will be depreciated using MACRS schedule as a 5-year property and will be worthless after 5 years. Assume that the fifirst depreciation is realized immediately. The marginal tax rate is 20%. The cost of capital is 10%. Determine the incremental cash flflows related to the computer, calculate their NPV, and calculate the corrected NPV of the project.

Reference no: EM132420965

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