show all excel formulas/ work answering the following: Solve for : LO2 17 LO2 16.Project Evaluation Your firm is contemplating the purchase of a new $395,000 computer-based order entry system. The systemwill be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save$125,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $35,000 at thebeginning of the project. Working capital will revert back to normal at the end of the project. If the tax rate is 21Page 306percent, what is the IRR for this project?LO2 17.Project EvaluationIn the previous problem, suppose your required return on the project is 10 percent and your pretax costsavings are $135,000 per year. Will you accept the project? What if the pretax cost savings are only $95,000 per year?

A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…

Project Evaluation In the previous problem, suppose your required return on the project is 10 percent and your pretax cost savings are $135,000 per year. Will you accept the project? What if the pretax cost savings are only $95,000 per year?

Project Evaluation In the previous problem, suppose your required return on the project is 10 percent and your pretax cost savings are $135,000 per year. Will you accept the project? What if the pretax cost savings are only $95,000 per year?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 11PROB

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show all excel formulas/ work answering the following: LO2 16. Project Evaluation Your firm is contemplating the purchase of a new $395,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $125,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $35,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. If the tax rate is 21 Page 306 percent, what is the IRR for this project?LO2 17. Project Evaluation In the previous problem, suppose your required return on the project is 10 percent and your pretax cost savings are $135,000 per year. Will you accept the project? What if the pretax cost savings are only $95,000 per year?
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