Your firm is contemplating the purchase of a new $772,800 computer-based order e
ID: 2621851 • Letter: Y
Question
Your firm is contemplating the purchase of a new $772,800 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $69,000 at the end of that time. You will save $303,600 before taxes per year in order processing costs and you will be able to reduce working capital by $70,270 (this is a one-time reduction).
If the tax rate is 30 percent, what is the IRR for this project? (Do not round your intermediate calculations.)
rev: 09_18_2012
Your firm is contemplating the purchase of a new $772,800 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $69,000 at the end of that time. You will save $303,600 before taxes per year in order processing costs and you will be able to reduce working capital by $70,270 (this is a one-time reduction).
Explanation / Answer
Your firm is contemplating the purchase of a new $772,800 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $69,000 at the end of that time. You will save $303,600 before taxes per year in order processing costs and you will be able to reduce working capital by $70,270 (this is a one-time reduction).
If the tax rate is 30 percent, what is the IRR for this project? (Do not round your intermediate calculations.)
If the tax rate is 30 percent, what is the IRR for this project? (Do not round your intermediate calculations.)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.