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Your firm is contemplating the purchase of a new $ 5 7 0 , 0 0 0 computer - based order entry system. The system

Your firm is contemplating the purchase of a new $570,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $86,000 at the end of that time. You will be able to reduce working capital by $111,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. The tax rate is 22 percent and the required return on the project is 10 percent.

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