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Your firm is contemplating the purchase of a new $1,000,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 10
Your firm is contemplating the purchase of a new $1,000,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 10 (ten-) year life. It will be worth $100,000 at the end of that time. You will save $500,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $120,000 (this is a 1 (one-) time reduction). If the tax rate is 35 percent and discount rate is 15%, what is the NPV for this project? Is it worth investing in the computer-based order entry system
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