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

question 63

Multiple Choice

You are considering investing $600,000 in a new automated inventory system that will provide and 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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