Your firm is contemplating the purchase of a new $1,110,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $108,000 at the end of that time. You will be able to reduce working capital by $150,000 (this is a one-time reduction). The tax rate is 22 percent and your required return on the project is 21 percent and your pretax cost savings are $461,400 per year.

a. What is the NPV of this project?

b. What is the NPV if the pretax cost savings are $332,200 per year?

c. At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?