Question
Your firm is contemplating the purchase of a new $1,344,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year
Your firm is contemplating the purchase of a new $1,344,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $120,000 at the end of that time. You will save $528,000 before taxes per year in order processing costs and you will be able to reduce working capital by $177,994 (this is a one-time reduction). Required : If the tax rate is 30 percent, what is the IRR for this project? (Do not round your intermediate calculations.) rev: 09_18_2012 25.60% 26.88% 18.01% 24.58% 24.41%
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