Computer-based order entry system

Assignment Help Financial Management
Reference no: EM131317841

Your firm is contemplating the purchase of a new $777,000 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $53,000 at the end of that time. You will save $173,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $48,000 at the beginning of the project. Working capital will revert back to normal at the end of the project.

If the tax rate is 30 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

IRR             %

Reference no: EM131317841

Questions Cloud

Explain the various digital laws and legislation : Explain, in detail, what you believe to be the greatest challenge facing law enforcement agencies investigating exploitation, cyber stalking, and obscenity. Provide a rationale for your response.Identify the specific challenges that overlapping o..
Apply the concept of time value of money : Why does money have a time value? Can you provide at least one real-life scenario in which you can apply the concept of “time value of money”? Funds set aside to finance the incentive program can be invested at 3%. The CEO has asked you to brief him ..
Determining the monthly mortgage payment : You borrow $200,000 to buy a house. The mortgage interest rate is 4.5 percent and the loan period is 30 years. Payments are mademonthly. What is your monthly mortgage payment?
What is the current price of the stock : Ginger Baker, Inc. just paid an annual dividend of $3 a share and this dividend is expected to grow at a rate of 4% per year for the foreseeable future. If the discount rate for Ginger Baker is 9%, what is the current price of the stock?
Computer-based order entry system : Your firm is contemplating the purchase of a new $777,000 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $53,000 at the end of that time. Working capital will revert ..
What is the standard deviation of returns : The common stock of Air United had annual returns of 13.7 percent, 4.8 percent, -6.7 percent, and 27.9 percent over the last four years, respectively. What is the standard deviation of these returns?
How much can bank b increase its loan making : What is the maximum amount in new loans that could be made in the financial depository institutions system following the initial increase in Hometown Bank's excess reserves if the reserve requirement were 20 percent?
Estimate of the company cost of equity : Stock in Country Road Industries has a beta of 1.01. The market risk premium is 9 percent, and T-bills are currently yielding 5.5 percent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 7.5 percent a..
Design a serial 2s complementer with a shift register : Design a serial 2s complementer with a shift register and a flip-flop

Reviews

Write a Review

Financial Management Questions & Answers

  Shareholders are more apt to prefer high dividend payout

Shareholders are more apt to prefer a high dividend payout if the firm:

  Discuss the pros of full financial disclosure

Discuss the pros of full financial disclosure. You must take a position advocating full disclosure and why this is beneficial for the marketplace and the economy or a position arguing that the associated costs of full disclosure outweigh its benefits..

  Semiannual interest payments

A bond has a $1,000 par value, semiannual interest payments of $40, and a current market value of $1,054. The bonds mature in 12.5 years. The coupon rate is _____ percent, the current yield is _____ percent, and the yield to maturity is _____ percent..

  The company also has two bond issues outstanding

Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The company also has two bond issues outstanding. Assume that the overall cost of debt is the weighted average of tha..

  Pension plan is an annuity with guaranteed return

Meg's pension plan is an annuity with a guaranteed return of 7% per year (compounded quarterly). She would like to retire with a pension of $30,000 per quarter for 10 years. If she works 22 years before retiring, how much money must she and her emplo..

  Find the monthly payment and the unpaid balance

Mark makes his first deposit of $1500 into a Roth IRA earning 6.5% interest compounded annually at age 36. He continues to make an annual deposit of $1500 until he is 60 (25 deposits in all). The Smith’s family takes out a 30-year mortgage at 4.25% c..

  What is the npv of this project if the required return

What is the IRR for this project? What is the NPV of this project if the required return is 6 percent? What is the NPV of the project if the required return is 0 percent? What is the NPV of the project if the required return is 23 percent?

  Sausage system with an installed cost

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $765,000. This cost will be depreciated straight-line to zero over the project’s six-year life, at the end of which the sausage system can be scrapped for $100,000. If the ..

  A treasury bond with the longest maturity

A Treasury bond with the longest maturity (30 years) has an ask price quoted at 98:09. The coupon rate is 3.80 percent, paid semi-annually. What is the yield to maturity of this bond?

  What is the total firm value and value of common equity

Blur Corps FCFs are expected to grow at a constant rate of 3.18% per year in the future. The market value of BLur Corps outstanding debt is $15,318 million, and preferred stocks value is $8,510 million. BLur corp has 675 million shares of common stoc..

  Under the concept of an efficient market

Under the concept of an efficient market, a random walk in stock prices means that:

  Find cost of debt - estimate cost of equity

How you estimated the percentage of capital that comes from debt, and common equity - find cost of debt

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd