Can someone please give a Analysis and recommendation for this question?
Henry Jones is the owner of True Adventure Vacations, Inc. He is considering the purchase of computer equipment that will facilitate airline and hotel accommodations. He paid a consultant a $20,000 fee to identify the best computer system and to identify the best computer system and to identify related costs of the project. The computer will cost $300,000. Installation will cost $20,000 and training of personnel will cost $10,000. He will incur $50,000 in advertising costs to kick off the new improved services that will feature worldwide accommodations. He projects that there will be a $200,000 increase in sales annually each year over the life of the five-year project. Costs are 60% of sales. The computer has a five-year useful life and a salvage value of $30,000. Jones will use straight-line depreciation. Working capital investment is $10,000 and will be fully recovered at the termination of the project at the end of five years. The tax rate is 34% and the discount rate is 12%.
Should the investment be made?
