Your firm is contemplating the purchase of a new $$525,000$ computer$-$based order entry

system. The system will be depreciated straight$-$line to zero over its five$-$year life. It will

be worth $$59,000$ at the end of that time. You will be able to reduce working capital by

$$84,000($this is a one$-$time reduction$).$ The tax rate is $23$ percent and the required return

on the project is $11$ percent.

If the pretax cost savings are $$150,000$ per year, what is the NPV of this project? $($Do not

round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$

Will you accept or reject the project?

Reject

Accept

If the pretax cost savings are $$115,000$ per year, what is the NPV of this project? $($A

negative answer should be indicated by a minus sign. Do not round intermediate

calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

NPV

Will you accept or reject the project?

Accept

Reject

At what level of pretax cost savings would you be indifferent between accepting the

project and not accepting it$?($Do not round intermediate calculations and round

your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Cost savings