Henry Jones is the owner of True Adventure Vacations, Inc. He is considering the purchase of computer equipment that wi

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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?