What is the net present value of this project

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Question - Appen Ltd. is considering investing in a new data analytics software that costs $500,000. The new software will generate incremental revenues of $50,000 per year for twenty years. The cash operating costs needed to generate these revenues will total $5,000 per year. The software will be amortised on a straight-line basis over twenty years to zero. Appen Ltd.'s tax rate is 30 percent, and its cost of capital is 13 percent.

Required -

(a) What is the net present value of this project?

(b) Should the company approve this project? Explain why or why not.

Reference no: EM132986127

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