Problemgemini llc invested 1 million in a state-of-the-art, Ask an Expert

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Problem:

Gemini, LLC, invested $1 million in a state-of-the-art information system that promises to reduce processing costs for its purchasing activities by $120,000 per year for the next 10 years. The company will scrap its old information system and will receive no money as a consequence. The new system will be depreciated over 10 years at a rate of $100,000 per year. Gemini's tax rate is 30 percent, and the company has a 7 percent after-tax cost of capital.

Required:

Question: What is the after-tax net present value of Gemini's new information system? Use the time value of money charts as needed for your calculations. If required, use a minus sign to indicate a negative net present value. Do not round intermediate amounts. Round your final answer to two decimal places.

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164634

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