Question
Your firm is contemplating the purchase of a new $440,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 6-year
Your firm is contemplating the purchase of a new $440,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 6-year life. It will be worth $57,000 at the end of that time. You will save $161,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $44,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. The tax rate is 24 percent. |
What is the aftertax salvage value of the equipment? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
What is the annual operating cash flow? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
What is the IRR for this project? (Do not round intermediate calculations and round your answer as a percent rounded to 2 decimal places, e.g., 32.16.); |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started