Capital Investment AnalysisTake home exam: spreadsheet to be completed on ExcelInternational Banking Group (IBG) has had considerable success in the marketing of its franchised insurance services program to regional banking firms. Senior management has suggested that this program be expanded on a national scale to take advantage of the bank’s growing expertise in this area. In order to do this the bank will have to acquire a new computer and accounting information processing system. The cost of the computer hardware to support this venture is estimated to be $4 million. In addition to this one-time capital outlay for computer equipment, the bank estimates that it will have to acquire additional equipment costing $500,000. Both the computer and the other equipment will be depreciated under the Modified ACRS rules for a 7-year, 200 percent class asset. The expected economic life of the venture is ten years. Beyond that point in time the bank estimates the competition will force it to abandon this venture. The expected salvage value of all the new equipment, including the computer, is
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