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All of the answers so far are correct, but everything with the green triangle in the upper left of the corner needs to be answered.
All of the answers so far are correct, but everything with the green triangle in the upper left of the corner needs to be answered. Thanks!
Your firm is contemplating the purchase of a new $535,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $165,000 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 24 percent, what is the IRR for this project? Input area: \begin{tabular}{|lr|} \hline Initial investment & $535,000 \\ Pretax salvage value & $30,000 \\ Cost savings per year & $165,000 \\ Working capital reduction & $60,000 \\ Tax rate & 24% \\ Project and asset life & 5 \\ \hline \end{tabular} (Use cells A6 to B11 from the given information to complete this question. You must use the built-in Excel function to answer this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit.)Step by Step Solution
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