Accounting Information Systems 1st Edition by Vernon Richardson,Chengyee Chang ,Rod Smith

Exercise 21

Use Microsoft Excel to assess the NPV of an IT initiative. The initiative will require an initial investment of $250,000 and is expected to return $150,000 per year for the next 3 years. Assume a discount rate of 10 percent. What is the NPV? How does the NPV change if the discount rate is 15 percent? Describe how changes in the discount rate assumption can affect the NPV.