Answer:
BD Corporation should not purchase the new computers
Explanation:
initial outlay year 0 = -$300,000
increased productivity per year = $75,000 for years 1-5
discount rate = 8%
NPV = -$300,000 + $75,000/1.08 + $75,000/1.08² + $75,000/1.08³ + $75,000/1.08⁴ + $75,000/1.08⁵ = -$300,000 + $69,444.44 + $64,300.41 + $59,537.42 + $55,127.24 + $51,043.74 = -$300,000 + 299,453.25 = -$546.75
since NPV is negative, then the project should be rejected
we can also use an annuity factor to determine the present value of this annuity, PV = $75,000 x 3.9927 = $299,452.50
NPV = -$300,000 + $299,452.50 = -$547.50
