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Your firm is contemplating the purchase of a new $720,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year
Your firm is contemplating the purchase of a new $720,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $75,000 at the end of that time. You will be able to reduce working capital by $110,000 (this is a one-time reduction). The tax rate is 35 percent and your required return on the project is 20 percent. If your pretax cost savings are $300,000 per year, the NPV for the project is $ and you will the project. If your pretax cost savings are $240,000 per year, the NPV for the project is $ and you will the project. You would be indifferent between accepting the project and not accepting it if your pretax cost savings were $. (Do not include the dollar signs ($). Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))
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