eEgg $is$ considering the purchase $of$ a new distributed network computer system $to$ help handle its warehouse inventories. The system costs $$60,000to$ purchase and install and $$37,000to$ operate each year. The system $is$ estimated $tobe$ useful for $4$ years. Management expects the new system $to$ reduce the cost $of$ managing inventories $by$ $$67,500$ per year. The firm$scostof$ capital $(discount$ rate$)is9\%.$

Required:

$1.$ What $is$ the net present value $(NPV)of$ the proposed investment under each $of$ the following independent situations? $(Use$ the appropriate present value factors from Appendix $C,$ TABLE $1$ and Appendix $C,$ TABLE $2.)$

$1a.$ The firm $is$ not yet profitable and therefore pays $no$ income taxes.

$1b.$ The firm $isin$ the $23\%$ income tax bracket and uses straight$-$line $(SLN)$ depreciation with $no$ salvage value. Assume MACRS rules $do$ not apply.

$1c.$ The firm $isin$ the $23\%$ income tax bracket and uses double$-$declining$-$balance $(DDB)$ depreciation with $no$ salvage value. Given a four$-$year life, the $DDB$ depreciation rate $is50\%(i.e.,225\%).In$ year four, record depreciation expense $as$ the net book value $(NBV)of$ the asset $at$ the start $of$ the year.

$2.$ What $is$ the internal rate $of$ return $(IRR)of$ the proposed investment for situations $in$ requirement $1,$ parts $(a)$ through $(c)?$ Use the IRR builit$-in$ function $in$ Excel $to$ compute the IRR.