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Your firm is contemplating the purchase of a new $ 6 2 0 , 0 0 0 computer - based order entry system. The system

Your firm is contemplating the purchase of a new $620,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $68,000 at the end of that time. You will save $250,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $83,000(this is a one-time reduction). If the tax rate is 23 percent, what is the IRR for this project?

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