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Your firm is contemplating the purchase of a new $888,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5

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Your firm is contemplating the purchase of a new $888,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5 -year life. It will be worth $86,400 at the end of that time. You will be able to reduce working capital by $120,000 (this is a one-time reduction). The tax rate is 24 percent and your required return on the project is 19 percent and your pretax cost savings are $255,800 per year. a. What is the NPV of this project? NPV b. What is the NPV if the pretax cost savings are $355,250 per year

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