Next Service Centre Is Considering Purchasing a New Computer Network

question 169

Essay

Next Service Centre is considering purchasing a new computer network for $95,000. 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 $14,500 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?

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Definitions:

Ancient Greeks

The people and culture of Greece during the classical period of antiquity, renowned for contributions to philosophy, art, politics, and science.

Stage Of Development

A phase in the growth or progression of something, often used in the context of psychological, physical, or social development.

Epigenome

The full set of factors, from DNA to outside world that controls the expression of coded genes.

Hereditary Material

Genetic information passed down from parents to offspring, primarily contained within DNA.