Problem 10-23 Project Evaluation (LO1, 2) Your firm is contemplating the purchase of a new $425,000 computer-based order entry system. The PVCCATS is $98,888.97, and the machine will be worth $30,000 at the end of the five-year life of the system. you will be able to reduce working capital by $60,000 (this is a one-time reduction). The tax rate is 35% and the required return on the project is 11%. If the pre-tax cost savings are $150,000 per year, and the machine can be depreciated at 30% (Class 10).

1- What is the NPV of this project? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

NPV $

2- Will you accept or reject the project? multiple choice

Reject Accept

3- If the pre-tax cost savings are $100,000 per year, what is the NPV of this project? (Negative answer should be indicated by a minus sign. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

NPV $

4- Will you accept or reject the project? multiple choice

Accept Reject

5- At what level of pre-tax cost savings would you be indifferent between accepting the project and not accepting it? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

Cost savings $