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Your firm is contemplating the purchase of a new $739,200 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 $739,200 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $66,000 at the end of that time. You will save $290,400 before taxes per year in order processing costs and you will be able to reduce working capital by $99,760 (this is a one-time reduction).
Required : If the tax rate is 30 percent, what is the IRR for this project? (Do not round your intermediate calculations.)
A:17.96%
B:24.50%
C:25.70%
D:26.99%
E:24.67%
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