* IRR of each 18.5 Rossco Incorporated is considering purchasing a new Z-660 computer to maxi- mize office efficiency. The proposal estimates that initial systems design would cost $54,000; hardware, $74,000; and new software, $35,000. One-time initial training costs are expected to be $11,000, an additional $20,000 will be required to install the system, and $12,000 will be required to convert the files. A net reduction of three employees, whose average salaries are $40,000 per year, is expected if the new machine is acquired. A just-completed special study found that computerization could decrease average yearly inventory by $150,000. Annual operating costs, other than employee wages, are expected to be $30,000 per year higher than those for the current manual system. EX The expected life of the machine is four years, with an estimated salvage value of zero. The effective tax rate is 40%. For purposes of the feasibility study, assume that all costs associated with the computer purchase will be depreciated equally over the four-year life using the straight-line method. Assume that Rossco can invest money made available from the reduction in inventory at 11% annually. Also, assume that all cash flows, except for the initial investment and start-up costs, are at the end of the year. Assume 365 days in a year. Required Use a spreadsheet to perform a feasibility analysis to determine if Rossco should pur- chase the computer. Compute the following as part of the analysis: a. initial investment b. after-tax cash flows for years 1 through 4 c. payback period d. net present value e. internal rate of return