Question: your firm is contemplating the purchase of a new 585000...
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Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $73,000 at the end of that time. You will save $180,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $88,000 (this is a one-time reduction). If the tax rate is 22 percent, what is the IRR for this project? |
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