Your firm is contemplating the purchase of a new $640,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $117,000 at the end of that time. You will save $202,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $132,000 (this is a one-time reduction). If the tax rate is 23 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Your firm is contemplating the purchase of a new $640,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $117,000 at the end of that time. You will save $202,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $132,000 (this is a one-time reduction). If the tax rate is 23 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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