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Apple is considering investing in a complete small business system. The initial investment will be $70,000. The system is in the 5-year MACRS category, and the firm's tax rate is 43%. The system is expected to provide additional revenue of $32,000 per year for the next six years, and to reduce expenses by $7,000 per year for the same period.

a) Calculate the net after-tax cash flows from this investment.

b) Calculate the net present value of the system, given that the law firm's weighted average cost of capital is 12%. Compute IRR in Excel using IRR formula.

c) Should they buy the computer system?

Can someone please help me solve this step by step?

Is there a formula without using excel?

I appreciate people taking the time to help me with this...will rate asap.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91384530

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