New computer system can be purchased

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Reference no: EM131489201

If a new computer system can be purchased for $25,000 and will be depreciated using MACRS 3-year rates, and will save your firm $10,000 per year in labor costs for the next five years (i.e. assume a five year useful life for the computer system), what would be the NPV for this replacement analysis if the old computer system could be sold for $5,000 and has one more year of depreciation in the amount of $3,000. The tax rate is 40% and the WACC is 8%.

Reference no: EM131489201

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