The president of Real Time Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $$40,000,$ and it falls into the MACRS $3-$year class.

Purchase of the computer would require an increase in net operating working capital of $$2,000.$ The computer would increase the firm's before$-$tax revenues by $$20,000$ per year but would also increase operating costs by $$5,000$ per year. The computer is expected to be used for $4$ years and then be sold for $$25,000.$ The firm's marginal tax rate is $40$ percent, and the project's cost of capital is $14$ percent.

What is the project's IRR?