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The manager at Vastine Medico is considering a new computer system. The purchase price of the computer system is $40,000. The CFO decided that the
The manager at Vastine Medico is considering a new computer system. The purchase price of the computer system is $40,000. The CFO decided that the computer system can be classified in the MACRS 3-year class. The computer system will require a $3,000 investment in net working capital. The computer system is expected to increase sales by $40,000 per year and raise operating costs by $25,000 annually. After three years, the computer system will be sold for $25,000. Investors demand a required rate of return of 13% and Vastine Medico tax rate is 40%. MACRs Depreciation Schedule Year 2 4 5 6 3 Year Class 33% 45% 15% 7% 5 Year Class 20% 32% 19% 12% 11% 6% What is the IRR of the project
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