Is it worthwhile to buy the computer

Assignment Help Financial Management
Reference no: EM132073763

RightPrice Investors, Inc., is considering the purchase of a $361,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method.

The market value of the computer will be $61,000 in five years. The computer will replace 5 office employees whose combined annual salaries are $106,000.

The machine will also immediately lower the firm's required net working capital by $81,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 35 percent.

The appropriate discount rate is 11 percent. Calculate the NPV of this project. Is it worthwhile to buy the computer?

Reference no: EM132073763

Questions Cloud

Calculate the total assets and liabilities : Calculate the total assets, liabilities, and owners' equity at the end of the month and calculate the amount of net income for the month
Applying the systems-selling concept : Applying the "systems-selling concept", what additional services could you offer that would make a complete package or systems solution to your customers?
What is the relationship between market yield rates : One year after the 5-year bond offering, yield rates had risen to 10%; but, What is the relationship between market yield rates and bond values
Motivating desired performance : DMT Biotech is a biotechnology research and development company that designs products for the needs of life science researchers.
Is it worthwhile to buy the computer : The market value of the computer will be $61,000 in five years. The computer will replace 5 office employees whose combined annual salaries are $106,000.
How should katie treat receipt of partnership interest : Tara and Robert formed the TR Partnership four years ago. How should Katie treat the receipt of the partnership interest in the current year
Community values of the mirabal sisters : Examine one of the community values of the Mirabal sisters' village of Oyo de Agua and relate it to a similar value in your community.
What should the initial p-e be for the firm : Assume, in assessing the initial P/E ratio, the investment banker will first determine the appropriate industry P/E based on the Standard & Poor's 500 Index.
Hrm problems and expatriate assignments : "HRM Problems and Expatriate Assignments" Determine two (2) HRM problems that typically arise with expatriate assignments.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd