# Market Top Investors, Inc., is considering the purchase of a \$365,000 computer with an economic life

Market Top Investors, Inc., is considering the purchase of a \$365,000 computer with an economic life of four years. The computer will be fully depreciated over four years using the straight-line method, at which time it will be worth \$114,000. The computer will replace two office employees whose combined annual salaries are \$95,000. The machine will also immediately lower the firm’s required net working capital by \$84,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 24 percent. The appropriate discount rate is 9 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Please help figure out where I am making a mistake: Streight line Method depreciation: Accumulated Depreciation = Cost of Asset/Economic Life Year 0 1 2 3 4 Savings in annual cost before tax) \$95,000 \$95,000 \$95,000 \$95,000 Depreciation Exense (\$91,250) (\$91,250) (\$91,250) (\$91,250) Net Savings before tax \$3,750 \$3,750 \$3,750 \$3,750 Less Tax \$2,850 \$2,850 \$2,850 \$2,850 After Tax Savings \$900 \$900 \$900 \$900 Initial Investemetn (\$365,000) After Tax Salvage Value \$     86,640.00 Working Capital \$84,000 (\$84,000) Add back depreciation expense \$91,250 \$91,250 \$91,250 \$91,250 Net Cash Flow (\$281,000) \$         92,150.00 \$92,150 \$92,150 \$94,790 PV Factor @9% 1 0.917431193 0.841679993 0.77218348 0.77218348 PV (\$281,000) \$         84,541.28 \$77,560.81 \$71,156.71 \$73,195.27 NPV \$25,454.08