Question

Your firm is contemplating the purchase of a new $794,500 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $59,000 at the end of that time. You will be able to reduce working capital by $54,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. Assume the tax rate is 30 percent.

Suppose your required return on the project is 9 percent and
your pretax cost savings are $149,000 per year. What is the NPV of
the project? **(A negative answer should be indicated by a
minus sign. Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)**

Answer #1

Your firm is contemplating the purchase of a new $480,000
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 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. Assume the
tax rate is 35 percent. Requirement 1: Suppose your required return
on...

Your firm is contemplating the purchase of a new $525,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its five-year life. It will be worth
$59,000 at the end of that time. You will be able to reduce working
capital by $84,000 (this is a one-time reduction). The tax rate is
23 percent and the required return on the project is 11
percent.
a)If the pretax cost savings are $150,000 per year, what is the...

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. It will be worth
$44,000 at the end of that time. You will be able to reduce working
capital by $69,000 (this is a one-time reduction). The tax rate is
23 percent and the required return on the project is 11 percent. If
the pretax cost savings are $150,000 per year, what is the...

18. Your firm is
contemplating the purchase of a new $540,000 computer-based order
entry system. The system will be depreciated straight-line to zero
over its five-year life. It will be worth $68,000 at the end of
that time. You will be able to reduce working capital by $93,000
(this is a one-time reduction). The tax rate is 21 percent and the
required return on the project is 9 percent.
If the pretax cost
savings are $150,000 per year, what is...

Your firm is contemplating the purchase of a new $1,184,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its 5-year life. It will be worth
$115,200 at the end of that time. You will be able to reduce
working capital by $160,000 (this is a one-time reduction). The tax
rate is 33 percent and your required return on the project is 21
percent and your pretax cost savings are $379,800 per year.
Requirement 1: What...

Your firm is contemplating the purchase of a new $888,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its 5-year life. It will be worth
$86,400 at the end of that time. You will be able to reduce working
capital by $120,000 (this is a one-time reduction). The tax rate is
34 percent and your required return on the project is 18 percent
and your pretax cost savings are $264,550 per year.
Requirement 1:
What...

Your firm is contemplating the purchase of a new $2,146,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its 5-year life. It will be worth
$208,800 at the end of that time. You will be able to reduce
working capital by $290,000 (this is a one-time reduction). The tax
rate is 33 percent and your required return on the project is 20
percent and your pretax cost savings are $670,500 per year.
Requirement 1:...

Project Evaluation. Your firm is contemplating
the purchase of a new $410,000 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...

Your firm is contemplating the purchase of a new $555,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its five-year life. It will be worth
$77,000 at the end of that time. You will save $169,000 before
taxes per year in order processing costs, and you will be able to
reduce working capital by $102,000 (this is a one-time reduction).
If the tax rate is 24 percent, what is the IRR for this project?
(Do...

Your firm is contemplating the purchase of a new $570,000
computer-based order entry system. The system will be depreciated
straight-line to zero over its five-year life. It will be worth
$86,000 at the end of that time. You will save $175,000 before
taxes per year in order processing costs, and you will be able to
reduce working capital by $111,000 (this is a one-time reduction).
If the tax rate is 22 percent, what is the IRR for this project?
(Do...

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