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Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year
Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $70,000 at the end of that time. You will save $145,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $75,000. If the tax rate is 30 percent, what is the IRR for this project? In the previous problem you used straight line depreciation. This time use the MACRS 5-year depreciation schedule and answer the question again
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