Question
In: Finance
Your firm is contemplating the purchase of a new $480,000 computer-based order entry system. The system...
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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: |
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If the tax rate is 35 percent, what is the IRR for this project? |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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 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. Assume the
tax rate is 35 percent.
Requirement 1:
Suppose your required return on...
Your firm is contemplating the purchase of a new $475,000 computer based order entry system will...
Your firm is contemplating the purchase of a new
$475,000 computer based order entry system will be depreciated
straight line to zero over its 6 year life . It will be worth $60
,000 at the end of that time . You will save $165,000 before taxes
per year in order processing costs, and you will be able to reduce
working capital by $45,000 at the beginning of the project. Working
capital will revert back to normal at the end...
Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $595,000
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(Do...
Your firm is contemplating the purchase of a new $630,000 computer-based order entry system. The system...
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$70,000 at the end of that time. You will save $260,000 before
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(Do...
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Your firm is contemplating the purchase of a new $518,000
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capital by $70,000 (this is a one-time reduction). The tax rate is
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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
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NPV...
Your firm is contemplating the purchase of a new $605,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $605,000
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straight-line to zero over its five-year life. It will be worth
$65,000 at the end of that time. You will save $235,000 before
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If the tax rate is 25 percent, what is the IRR for this
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Your firm is contemplating the purchase of a new $592,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $592,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its 5-year life. It will be worth
$57,600 at the end of that time. You will be able to reduce working
capital by $80,000 (this is a one-time reduction). The tax rate is
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and your pretax cost savings are $201,400 per year. Requirement 1:
What...
Your firm is contemplating the purchase of a new $684,500 computer-based order entry system. The system...
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$66,600 at the end of that time. You will be able to reduce working
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At what level...
Your firm is contemplating the purchase of a new $490,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $490,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its 7-year life. It will be worth
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capital by $34,000 at the beginning of the project. Working capital
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a.
What is the aftertax salvage value...
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