13. 16.

Project evaluation [LO 10.1] Your firm is contemplating the purchase of a new $485 000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $35 000 at the end of that time. You will save $140 000 before taxes per year in order processing costs, and you will be able to reduce working capital by $60 000 (this is a one-time reduction). If the tax rate is 30 per cent, what is the IRR for this project?