Market Top Investors, Inc., is considering the purchase of a $350,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line...

Market Top Investors, Inc., is considering the purchase of a $350,000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight-line method, at which time it will be worth $66,000. The computer will replace two office employees whose combined annual salaries are $87,000. The machine will also immediately lower the firm’s required net working capital by $76,000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 21 percent. The appropriate discount rate is 9 percent.

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