Were contemplating a new automatic surveillance system to replace our current contract security system. It...
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Were contemplating a new automatic surveillance system to replace our current contract security system. It will cost $400,000 to get the new system. The cost will be depreciated straight-line to zero over the systems five-yearexpected life. The system is expected to be worth $50,000 at the end of five years. We think the new system will save us $105,000, before taxes, per year in contract security costs.
The tax rate is 34 percent. The required return is 12 percent. Create a projected cash flow model. What is the Capital Sprending for year 5?
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