Question: Your firm is contemplating the purchase of a new 580 000
Your firm is contemplating the purchase of a new $580,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $60,000 at the end of that time. You will save $210,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $75,000 (this is a one-time reduction). If the tax rate is 35 percent, what is the IRR for this project?
Answer to relevant QuestionsYou are evaluating two different silicon wafer milling machines. The Techron I costs $240,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Techron II costs $420,000, has a five-year life, ...Consider a project to supply 100 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,900,000 five years ago; if the land were sold today, ...In the previous problem, suppose you drive the truck x miles per year. How many miles would you have to drive the car before upgrading the car would be the better choice? You are at your desk at work when a co-worker excitedly comes to your desk and shows you the scenario analysis that he has just completed for a potential new project. All three scenarios show a positive NPV. He states, “We ...At an output level of 73,000 units, you calculate that the degree of operating leverage is 2.90. If output rises to 78,000 units, what will the percentage change in operating cash flow be? Will the new level of operating ...
Post your question