Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the abc computers corporation is considering wheth

The ABC Computers Corporation is considering whether to begin offering customers the option to have...

80.2K

Verified Solution

Question

Finance

The ABC Computers Corporation is considering whether to begin offering customers the option to have their old personal computers (PCs) recycled when they purchase new systems. The recycling system would require ABC Computers to invest $600,000 in the grinders and magnets used in the recycling process. The company estimates that for each system it recycles, it would generate $1.50 in incremental revenues from the sale of scrap metal and plastics. (hints! Revenue per unit: 1.50) The machinery has a five-year useful life and will be depreciated using straight-line depreciation toward a zero salvage value. ABC Computers estimates that in the first year of the recycling investment, it could recycle 100,000 PCs and that this number will grow by 20% per year over the remaining four-year life of the recycling equipment. ABC Computers uses a 10% discount rate to analyze capital expenditures and pays taxes equal to 30%.

a. What are the project cash flows? You can assume that the recycled PCs cost ABC Computers nothing.

b. Calculate the NPV and the IRR for the recycling investment opportunity.

Please explain every step

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

Construct the confidence interval for the population mean ?. c =0.90?, x=9.8?, ? =0.4?, and n...

Biology
1.2K views

In a particular country the number of humans is disproportionately comprised of more elderly people...

Biology
1.2K views

If an antigen that produces immunity on a pathogen is a carbohydrate would it be...

Basic Math
1.2K views

You measure the weights of 47 watermelons and find they have a mean weight of...

Algebra
1.2K views

area and perimeter of quadrilateral with side length 8

Accounting
1.2K views

Assume the actuary estimates the net cost of providing health care benefits to a particular...

Accounting
1.2K views

please answer this question dear sir I am in exam....

Accounting
1.2K views

A loan of $5000 is taken out today. It is due with interest at j4=8%...

Accounting
1.2K views

TB MC Qu. 21-71 (Algo) Based on a predicted level of production... Based on a...

Accounting
1.2K views

a responsibility Center is a business segment whose manager has control over cost, revenues, or...

Finance
1.2K views

If someone borrowed $17,000 at 4% simple interest rate per 3 month for 3 years,...

Accounting
1.2K views

Production records show that there were 400 units in the beginning inventory, 30% complete, 1200...