please answer it step by step, thanks! The law firm of Bushmaster, Cobra, and Asp...
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The law firm of Bushmaster, Cobra, and Asp is considering investing in a complete small business computer system. The initial investment in equipment will be $55,000, and will be used for 10 years with a salvage value of $5,000. During the 10 years that the system is in use, an additional $5,000 per year will be spent for maintenance costs. The equipment has a CCA rate of 45%.
The new system is expected to provide additional revenue of $15,000 per year for the next 10 years. The firms cost of capital is 12 percent and its tax rate is 40 percent. Using net present value analysis, should this investment be accepted?
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