MRE Sales is looking to acquire an ERP
Question # 00468476
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Updated on: 01/23/2017 06:19 AM Due on: 01/23/2017
MRE Sales is looking to acquire an ERP and has asked for your assistance. The company can purchase the system outright for $120,000 plus 5% sales tax, and delivery and install charges of $2,000. The ERP is expected to last 5 years and have a salvage value of $8,000. The company will use straight-line depreciation over the 5-year life. Its income tax rate is 40%. The company’s cost of capital is 12%. The system is expected to bring annual benefits of $35,000 over the 5-year period. Showing all calculations in Excel:
a. Compute the NPV of the project
b. Compute its payback period
a. Compute the NPV of the project
b. Compute its payback period
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Solution: MRE Sales is looking to acquire an ERP