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(20) 4. Your employer asked you to determine if the decision to invest of $400,000 is a system that will enhance annual reven
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Answer #1
If company enhanced maximum revenue by $140,000 plus $20,000 = $160,000.  
Year Revenue PV factor @25% Present value
Year 1 $        160,000        0.8000 $        128,000
Year 2 $        160,000        0.6400 $        102,400
Year 3 $        160,000        0.5120 $          81,920
Year 4 $        160,000        0.4096 $          65,536
Present value of cash inflow $        377,856
Less: Initial Investment $        400,000
Net Present Value $        (22,144)
The company should not accept the proposal of investment in the system because of net present value is negative. Not Accept
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