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Your firm is contemplating the purchase of a new $520,800 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 $520,800 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $46,500 at the end of that time. You will save $204,600 before taxes per year in order processing costs and you will be able to reduce working capital by $17,549 (this is a one-time reduction).
Required: If the tax rate is 34 percent, what is the IRR for this project? (Do not round your intermediate calculations.)
20.21%
19.95%
21.05%
22.10%
19.24%
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