Question: In this section, you MUST show your work/inputs so that the grader can determine what you did to reach your solution. You do not have

 In this section, you MUST show your work/inputs so that the

In this section, you MUST show your work/inputs so that the grader can determine what you did to reach your solution. You do not have to show every detail or every subtotal, but it must be clear enough to follow what was calculated. Question 23 (8 points) Your firm is considering the purchase of a new computer-based order entry system with a total installed cost of $378,600. You will be able to reduce net working capital by $22,000 at the start-up of the project (t=0). Working capital will revert back to normal at the end of the project. The system will be depreciated (to zero) using straight line depreciation over the project's five-year economic life. The system will be worth $25,000 at the end of that time. You will save $118,000 before taxes each year in order processing costs (expenses)[i.e., cash expenses will decline by $118,000 per year.]. The company's tax rate is 20% and they have a required rate of return of 12.5%. (a) What is the initial investment for this project? (b) What is the year-1 operating cash flow for this project? [Be sure to label what you enter as the "Initial Investment" and also what you enter as the "Yr-1 OCF" so that these two answers cannot be confused.]

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