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Your firm is contemplating the purchase of a new $ 5 4 5 , 0 0 0 computer - based order entry system. The system

Your firm is contemplating the purchase of a new $545,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $53,000 at the end of that time. You will save $295,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $68,000(this is a one-time reduction). If the tax rate is 22 percent, what is the IRR for this project?

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