Your firm is contemplating the purchase of a new $850,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth S150,000 at the end of that time. You will save $350, 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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1 Define Variables Initial Investment 850000 negative outflow Salvage Value 150000 positive inflow i... View the full answer