The law firm of Bushmaster, Cobra and Asp is assessed.

The law firm of Bushmaster, Cobra and Asp is assessed.
The law firm of Bushmaster, Cobra and Asp is considering investing in a complete small business computer system. The initial investment will be $35,000. The computer is in the 5-year MACRS category, and the firm’s tax rate is 34%. The computer system is expected to provide additional revenue of $15,000 per year for the next six years, and to reduce expenses by $10,000 per year for the same period.
(a) Calculate the net after-tax cash flows from this investment.
(b) Calculate the net present value of the system, that the law firm’s weighted average cost of capital is 12%.
(c) Should they buy the computer system?

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