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Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system...

Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $73,000 at the end of that time. You will save $180,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $88,000 (this is a one-time reduction). If the tax rate is 22 percent, what is the IRR for this project?

NPV = 0 = −$585,000 + 88,000 + $166,140(PVIFAIRR%,4) + [($166,140 + 56,940 − 88,000)/(1 + IRR)5]
IRR = 18.81%

How is this solved using a financial calculator

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I HAVE WRITTEN ALL STEPS.

jeff jeffy answered 2 years ago
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