onsulting company Clark Robinson and Morton CRM is in that never ending budgeting phase of the year. Realizing that they couldn't defer a technology update any longer the managers planned to replace all of the computers in the office. The old computers will be sold for market value. When the new computer has reached the end of their useful lives there will be sold as well. The cost of the combined new computers and annual software update should be more efficiency gains and increased volumes of sales at least that's what the managers are expecting. Information related to this investment is as follows. Cost of no computers $25,400. Salvage value of no computers at end of useful life 2400 dollars. Life of no computers in years five. Market value of all computers today equal to book value 1900 dollars. Annual software update costs necessary for all computers old or $3200. Annual operating cash inflows from efficiency gains and increased sales due to no computers $9600. Minimum required rate of return 6%. Applicable tax rate 24%. Determine if this investment makes sound financial sense for this company by completing the form. Calculate the IRR for this investment rounding answers to
The consulting company Clark Robinson and Morton CRM is in that never ending budgeting phase of the year. Realizing that they couldn't defer a technology update any longer the managers planned to replace all of the computers in the office. The old computers will be sold for market value. When the new computer has reached the end of their useful lives there will be sold as well. The cost of the combined new computers and annual software update should be more efficiency gains and increased volumes of sales at least that's what the managers are expecting. Information related to this investment is as follows. Cost of no computers $25,400. Salvage value of no computers at end of useful life 2400 dollars. Life of no computers in years five. Market value of all computers today equal to book value 1900 dollars. Annual software update costs necessary for all computers old or $3200. Annual operating
Calculate the IRR for this investment rounding answers to two decimal places.
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