You Are Considering Investing $600,000 in a New Automated Inventory

question 31

Multiple Choice

You are considering investing $600,000 in a new automated inventory system that will provide after-tax cost savings of $50,000 next year.These cost savings are expected to grow at the same rate as sales.If sales are expected to grow at 5% per year and your cost of capital is 10%,then what is the NPV of the automated inventory system?

• A)$400,000
• B)$500,000
• C)-$100,000
• D)$1,000,000

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Definitions:

Amino Acid

Organic compounds containing an amine group, a carboxylic acid group, and a side chain that varies between different amino acids, key building blocks of proteins.

Aspartic Acid

One of the 20 common amino acids in proteins, with a carboxylate side chain, making it acidic and polar.

Succinic Acid

A dicarboxylic acid with the chemical formula C4H6O4, used in the manufacture of pharmaceuticals, food additives, and biodegradable polymers.

Disulfide Linkages

Covalent bonds that form between sulfur atoms of two amino acid residues, often stabilizing the structure of proteins.