Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Joe & Dough Cafe is contemplating the purchase of a new $ 1 , 0 4 9 , 0 0 0 computer - based order

Joe & Dough Cafe is contemplating the purchase of a new $1,049,000 computer-based order entry system
The system will be depreciated straight-line to zero over its three-year life
It will be worth $156,300 at the end of that time
You will save $423,500 before taxes per year in order processing costs
You will be able to reduce working capital by $115,764(this is a one-time reduction). The net working capital will return to its original level when the project ends
The tax rate is 35 percent
Don't round intermediate calculations. Unless otherwise specified, enter your final answers as an integer without decimals or using 1,000 separators, e.g., enter 1234 for 1234.56. A negative number (e.g., a cash outflow) should be indicated with a "-" sign.
What is the year EBIT: $
What is the yearly OCF: $
What is the change in NOWC in year 3:$
What is the after-tax terminal value: $
What is the internal rate of return for this three-year project: IRR =%- Enter as a percent, rounded to two decimals, e.g., enter 1.23 for 1.234%.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Finance Theory And Policy

Authors: Paul Krugman, Maurice Obstfeld, Marc Melitz

12th Global Edition

1292417005, 978-1292417004

More Books

Students also viewed these Finance questions

Question

Define human resource management.

Answered: 1 week ago