Question: Project Evaluation Your firm is contemplating the purchase of a
Project Evaluation Your firm is contemplating the purchase of a new $840,000 computer- based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $75,000 at the end of that time. You will save $330,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $125,000 (this is a one-time reduction). If the tax rate is 35 percent, what is the IRR for this project?
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