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Your firm is contemplating the purchase of a new $535,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year

image text in transcribed Your firm is contemplating the purchase of a new $535,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $165,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $60,000 (this is a one-time reduction). If the tax rate is 24 percent, what is the IRR for this project? Input orea: \begin{tabular}{|lr|} \hline Initial investment & $535,000 \\ Pretax salvage value & $30,000 \\ Cost savings per year & $165,000 \\ Working capital reduction & $60,000 \\ \hline Tax rate & 24% \\ \hline Project and asset life \end{tabular} (Use cells A6 to B11 from the given information to complete this question. You must use the built-in Excel function to answer this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit.) Output area: Aftertax salvage value Sell equipment Taxes Aftertax cash flow

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