Corporate FInace Assignment/ Professional Essay Writers
KLM Flights are currently in a financial crisis and are looking at methods to decrease costs to stay afloat. The company is considering the purchase of a new computerized system that is expected to save the company $76,000 at the end of each year in reduced wages.
The system costs $252,000, plus another $19,000 to be installed. It is expected to last for five years after which it can be sold for $46,000. Operating expenses (such as electricity and maintenance) are $9,000 pa.
a) Determine the annual net cash flows of this investment (ignore the effect of taxes). Enter the information in the following table. Indicate whether cash flows are + or -:
|Net Cash Flow|
b) Calculate the NPV if the required rate of return is 10% pa.
NPV10% = $________.
c) Calculate the NPV if the required rate of return is 12% pa.
NPV12% = $_______. Get Finance Help Today