Computer-based production system

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Your firm is contemplating the purchase of a new $800,000 computer-based production system. The system will be depreciated straight-line to zero over its four-year life. It will be worth $120,000 at the end of that time. The system produces operating cash flow of $300,000 before taxes per year. The system also requires additional working capital by $60,000 (this is a one-time increase in working capital.) If the tax rate is 30 percent and cost of capital is 12%, what are the NPV and IRR for this project?

Reference no: EM131496257

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