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linda_us, Master's Degree

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I cannot figure out how to arrive at the correct answer for

Customer Question

I cannot figure out how to arrive at the correct answer for the question below. The answer is NPV = -1,947. I calculate the present value for an ordinary annuity for the after tax cash flows (3.17 * 3150.00 (4500*.7). The Present value of the ordinary annuity for the after tax tax shield 3.17 * 1125.00 (3750*.3); however, I arrive at -1448.83 total for NPV and not -1947 "You are considering buying a computer for $15,000. It will provide you with a cash flow of $4,500 per year for 4 years. It is in the 25% CCA rate class. Your tax rate is at 30% and your expected return is at 10% per year.

No, the full question again is as follows: "You are considering buying a computer for $15,000. It will provide you with a cash flow of $4,500 per year for 4 years. It is in the 25% CCA rate class. Your tax rate is at 30% and your expected return is at 10% per year." There is no salvage value.