Question: please answer the questions in the right way. For example, the answer for A is and the answer for B is: until the last question.

please answer the questions in the right way. For example, the answer for A is
and the answer for B is: until the last question.
thanks for the help
31. 30 points) 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 $75,000 at t he end of that time. You will save $320,000 before taxes per year in order processing costs, and you will be able to reduce the net working capital by $105,000 (this is a one-time reduction). The net working capital will be restored to its original level when the project ends. The tax rate is 35%. Assume the discount rate is 10%. (a) What is the annual OCF for this project? (5 points) (b) What is the CAPEX before the project starts (i.e, at t-0) and when the project ends? (5 points) (c) What is the change in NWC before the project starts (i .e, at t-0) and when the project ends? (5 points) (d) What are the cash flows in each year for this project? (5 points) (e) What is the IRR for this project? (5 points) (f What is the NPV for this project? (5 points) 31. 30 points) 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 $75,000 at t he end of that time. You will save $320,000 before taxes per year in order processing costs, and you will be able to reduce the net working capital by $105,000 (this is a one-time reduction). The net working capital will be restored to its original level when the project ends. The tax rate is 35%. Assume the discount rate is 10%. (a) What is the annual OCF for this project? (5 points) (b) What is the CAPEX before the project starts (i.e, at t-0) and when the project ends? (5 points) (c) What is the change in NWC before the project starts (i .e, at t-0) and when the project ends? (5 points) (d) What are the cash flows in each year for this project? (5 points) (e) What is the IRR for this project? (5 points) (f What is the NPV for this project? (5 points)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
