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Please show ALL work. Real Time, Inc. has asked you to evaluate the acquisition...

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Finance

Please show ALL work.

Real Time, Inc. has asked you to evaluate the acquisition of a new computer system. The systems price is $48,000, and will be depreciated using straight line depreciation over a 3 year useful life to a salvage value of $6,000. Purchase of the system will require an immediate increase in net working capital of $2,000 that will last for the life of the project. The system will increase the firms before tax revenues by $25,000 per year. The computer system is expected to be used for 3 years and then sold for $10,000. The firms marginal tax rate is 40%, and the cost of capital is 9%. Calculate the cash flows and the net present value (NPV) for the investment.

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