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Next Service Centre Is Considering Purchasing a New Computer Network

question 125

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Next Service Centre is considering purchasing a new computer network for $82,000.It will require additional working capital of $13,000.Its anticipated eight-year life will generate additional client revenue of $33,000 annually with operating costs, excluding depreciation, of $15,000.At the end of eight years, it will have a salvage value of $9,500 and return $5,000 in working capital.Taxes are not considered.Required:
a.If the company has a required rate of return of 14%, what is the net present value of the proposed investment?
b.What is the internal rate of return?


Definitions:

Internal Temperature

The temperature within the body, which is meticulously regulated to maintain homeostasis and support physiological processes.

Semi-Circular Canals

Three looped structures in the inner ear that help to maintain balance by detecting rotational movements.

Vestibular System

The sensory system located in the inner ear that contributes to balance and spatial orientation.

Kinesthetic System

The sensory system that accounts for perception of the body's movements and position through receptors in the muscles, tendons, and joints.

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