Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life and has no salvage value. You will save $210,000 per year in order processing costs, and you will be able to reduce working capital by $75,000. If the tax rate is 30 percent, what is the IRR for this project? 18.82% 20.94% 28.17% Cannot be calculated from the information provided. None of the above.

Your firm is contemplating the purchase of a new $500,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life and has no salvage value. You will save $210,000 per year in order processing costs, and you will be able to reduce working capital by $75,000. If the tax rate is 30 percent, what is the IRR for this project? 18.82% 20.94% 28.17% Cannot be calculated from the information provided. None of the above.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 9P

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