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Your firm is contemplating the purchase of $780,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It
Your firm is contemplating the purchase of $780,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $45,000 at the end of that time. You will save $310,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $55,000 at the beginning of the project. Working capital will revert to normal at the end of the project. The firm
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