Your firm is contemplating the purchase of a new $1,332,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $129,600 at the end of that time. You will be able to reduce working capital by $180,000 (this is a one-time reduction). The tax rate is 30 percent and your required return on the project is 19 percent and your pretax cost savings are $397,400 per year.

Requirement 1:

What is the NPV of this project?

select)

$-91,639.46

$-89,749.99

$-99,197.36

$-97,307.88

$-94,473.67

Requirement 2:

What is the NPV if the pretax cost savings are $551,900 per year?

select)

$248,020.02

$236,209.54

$243,295.83

$229,123.25

$224,399.06

Requirement 3:

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

select)

$388,997.63

$419,462.50

$452,829.92

$441,539.47

$463,616.45