Your firm is contemplating the purchase of a new $542,500 computer-based order entry system

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Your firm is contemplating the purchase of a new $542,500 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $48,000 at the end of that time. You will save $168,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $43,000 at the beginning of the project. Working capital will revert back to normal at the end of the project.

Required:

If the tax rate is 40 percent, what is the IRR for this project? (Do not include the percent sign (%).Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

  IRR%  

    • 5 years ago
    Your firm is contemplating the purchase of a new 542500 computer-based order entry system
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