Evaluate the purchase of new computers for your company

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You must evaluate the purchase of new computers for your company and the total price of all the computers is $30,000 it would cost another $20,000 to install software so that they can be used in the business. The computers fall into the MACRS three-year class and would be sold after 3 years for $5000. The applicable depreciation rates are 33% 45% 15% 7% The project would have no effect on the revenues but would save the firm $35,000 per year in before tax labor costs. The firms corporate tax rate is 35% What are the projects cash flows for year 2?

Reference no: EM132055504

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