Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 at the beginning of the project. Working capital will revert back to normal at the end of the project. If the tax rate is 24 percent, what is the IRR for this project? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. IRR %
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 vill save $165,000 before taxes per yeat in order processing costs, and you will be able to reduce working capital by $60,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. If the tax rate is 24 percent, what is the IRR for this project? Note: Do not round intermediote calculations and enter your answer as o percent rounded to 2 decimal places, e.g., 32.16 , 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 vill save $165,000 before taxes per yeat in order processing costs, and you will be able to reduce working capital by $60,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. If the tax rate is 24 percent, what is the IRR for this project? Note: Do not round intermediote calculations and enter your answer as o percent rounded to 2 decimal places, e.g., 32.16

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Petromania Black Gold Paper Barrels And Oil Price Bubbles

Authors: Daniel O'Sullivan

1st Edition

1906659249,190665977X

More Books

Students also viewed these Finance questions

Question

3. Define EKP.

Answered: 1 week ago