What is the net present value of this investment

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Reference no: EM131442461

Assume that your company considering installing a new computer system that could reduce labor costs by $25,000 each year over the next five years. The purchase price (including installation and testing) of the new system is $105, 250. The system is expected to have a useful life of 5 years, after which time (in year 6) it can be sold in the secondary computer systems market for $10, 250. What is the Net Present Value of this investment if the discount rate is 8.5% per year? Should your company buy it?

Reference no: EM131442461

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