Your firm is contemplating the purchase of a new $595,000 computer-based order entry system. The system will
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Your firm is contemplating the purchase of a new $595,000 computer-based order entry system.
The system will be depreciated straight-line to zero over its 5-year life. It will be worth $81,000 at the end of that time. You will save $184,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $96,000 (this is a one-time reduction).
If the tax rate is 24 percent, what is the IRR for this project? NO EXCEL.
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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