Question
Your firm 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
Your firm 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 and 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. What is the internal rate of return for this three-year project?
The answer is 12.74. I know how to work it with excel but need help on how to work it on a financial calculator (I use BA II plus). Thank you in advance.
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