Capital will revert back to normal at the end of the project

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Reference no: EM131524814

Your firm is contemplating the purchase of a new $634,675 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be sold for $62,041 at the end of that time. You will save $235,045 before taxes per year in order processing costs, and you will be able to reduce working capital by $45,790 at the beginning of the project. Working capital will revert back to normal at the end of the project. The tax rate is 36 percent. What is the NPV of this project if the discount rate is 10.5 percent?

Reference no: EM131524814

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