Your firm is contemplating the purchase of a new $499,500 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $48,600 at the end of that time. You will be able to reduce working capital by $67,500 (this is a one-time reduction). The tax rate is 32 percent and your required return on the project is 17 percent and your pretax cost savings are $142,900 per year.

Requirement 1:What is the NPV of this project?

(Click to select)

$-33,513.87

$-32,822.86

$-36,277.90

$-35,586.89

$-34,550.38

Requirement 2:What is the NPV if the pretax cost savings are $198,500 per year?

(Click to select)

$90,731.03

$83,818.19

$86,410.50

$89,002.82

$82,089.98

Requirement 3:At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?

(Click to select)

$173,977.11

$150,842.12

$139,939.20

$166,720.23

$158,781.18