Automated inventory sorting system

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Reference no: EM133674204

Question

Second cup is thinking about buying a new $445,000 automated inventory sorting system. The system will be depreciated straight-line to zero over its 5-year life which will be worth $53,000 at the end of 5-year. The firm will save $139,000 before taxes per year in inventory management costs and the system requires an initial investment in net working capital of $25,000. If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project?

Reference no: EM133674204

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