Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your firm is contemplating the purchase of a new $660,000 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 $660,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $133,000 at the end of that time. You will save $210,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $148,000 (this is a one-time reduction). If the tax rate is 22 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.)

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

Fundamentals of Investment Management

Authors: Geoffrey Hirt, Stanley Block

10th edition

0078034620, 978-0078034626

More Books

Students also viewed these Finance questions

Question

Find reactions of support 1,2 and 3 F=10KN, a=2m, ?a=60 (45%) F 2a

Answered: 1 week ago