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Your firm is contemplating the purchase of a new $480,000 computer-based order entry system. The system...

Your firm is contemplating the purchase of a new $480,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $145,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $35,000 at the beginning of the project. Working capital will revert back to normal at the end of the project.
Required:

If the tax rate is 35 percent, what is the IRR for this project?

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jeff jeffy answered 1 year ago
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