Reference no: EM133153410

Question - Mars Inc., a family-owned limited liability company (LLC), is considering the purchase of a new computers (for its company-wide operations) which will reduce. operating costs by $5,850 in the first year of operations (i.e.. year 1). Operating costs in subsequent years are projected to decrease by 3.5 percent per year. The new computers are expected to be used for operations for the next 5 years and Mars will use 5-year MACRS to depreciate these computers and it expects to sell them at the end of its 5-year operating life for $11,500. The firm expects to be able to reduce net operating working capital (NOWC) by $15,250 when the new computers are installed but required net operating working capital (NOWC) will return to its original level, after 5 years. Mars' marginal tax rate is 40 percent, and it uses a 12.25 percent cost of capital to evaluate investments of this nature. If the new computers cost $75,000, should Mars LLC purchase these new computers, i.e., should the project be implemented or not?