Question

Your firm has the option of making an investment in new software that will cost $304,007 today, but will save the company money over several years, You estimate that the software will provide the savings shown in the following table (pictured) over its 5-year life. Should the firm make this investment if it requires a minimum annual return of 9% on all investments?

Year 01 AWN Savings estimate $83,000 $116,200 $107.900 $58,100 $33,200

Answer 1

১ Year CF Year ICF | 0| S (304,007.00)| 0 |-304007 1| S 83,000.00 | 1 [83000 | 2| $ 116,200.00 | 2 1162001 3| $ 107.900.00 13 107900. | 4| $ 58,100.00 | 4 58100 5| S 33,200.00 ] 5 133200. IPV |s 15,999 ||PV |=NPV(9%,B3:B7)+B2 |