Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your firm is contemplating the purchase of a new $655,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year

image text in transcribed Your firm is contemplating the purchase of a new $655,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $129,000 at the end of that time. You will save $208,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $144,000 (this is a one-time reduction). If the tax rate is 21 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct

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

Financial Management Core Concepts

Authors: Raymond M Brooks

3rd edition

133866696, 978-0133866698

More Books

Students also viewed these Finance questions