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What is the payback period

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Reference no: EM131815106

Question - Bailey, Root, and Wylie, LLP, a law firm, is considering the replacement of its old accounting system with new software that should save $6,000 per year in net cash operating costs. The old system has zero disposal volue, but it could be used for the next 12 years. The estimated useful life of the new software is 12 years, and it will cost $30,000. Minimum desired rate of return is 10%.

1. What is the payback period?

2. Compute the NPV.

Reference no: EM131815106

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