Question
Your firm is contemplating the purchase of a new $595,000 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 $595,000 computer-based order entry system.
The system will be depreciated straight-line to zero over its 5-year life. It will be worth $81,000 at the end of that time. You will save $184,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $96,000 (this is a one-time reduction).
If the tax rate is 24 percent, what is the IRR for this project? NO EXCEL.
Step by Step Solution
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Step: 1
To calculate the Internal Rate of Return IRR for the project we need to determine the cash flows ...
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
