Question: 1 . Your company is considering a new computer system initially costing $ 1 . 2 5 million. It will save $ 4 0 0

1. Your company is considering a new computer system initially costing $1.25 million. It will save $400,000 per year in inventory and receivables management costs. The system is expected to last for five years and will be depreciated using 3-year MACRS. The system is expected to have a salvage value of $25,000 at the end of year 5. There is no impact on net working capital. The marginal tax rate is 21%. The required return is 9%. Calculate the NPV and IRR for the project.

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