What is the npv of the project

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Question 1: Capital Budgeting, Write Code = All-Ill- As the CEO of Nu Life, a medical device start-up, you are looking to improve the company's financial performance by incorporating advanced technologies found in other industries. One such improvement is the implementation of a new centralized testing software. The software will cost $500,000 immediately and can be amortized for tax purposes over a 3-year period, with no salvage value. You estimate the software will lower development costs by $35,000 per year for 10 years. While the upfront investment occurs immediately, other expenses begin one full year from today.

a. If NuLife's cost of capital is 10% and the tax rate is 30%, what is the NPV of the project? Please round your answer to the nearest dollar [e.g. $1,504].

b. The government has just passed a law allowing software purchases to be completely expensed on initial purchase. What is the NPV of the project under the new tax law? Does this change your recommendation? Please round your answer to the nearest dollar {e.g. $1,504}.

Reference no: EM133121475

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