Network 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 $9500 and return $5000 in working capital.Ignore taxes.
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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Question

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The Answer of Network 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 $9500 and return $5000 in working capital.Ignore taxes.
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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_____________________________________________________________________________________________

Network Service Centre Is Considering Purchasing a New Computer Network