Find the npv if pretax cost savings are 195600 per year at

Assignment Help Finance Basics

Reference no: EM13476776

Your firm is contemplating the purchase of a new $573,500 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $55,800 at the end of that time. You will be able to reduce working capital by $77,500 (this is a one-time reduction). The tax rate is 31 percent and your required return on the project is 24 percent and your pretax cost savings are $271,650 per year.

Questions:

1. What is the NPV of this project?

2. What is the NPV if the pretax cost savings are $195,600 per year?

3. At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?

Reference no: EM13476776

Questions Cloud

Complete following problem related to market research and : complete the following problem related to market research and segmentation by writing a 1050- to 1400-word

As we all know love is not always easy perhaps one of loves : as we all know love is not always easy. perhaps one of loves greatest challenges is to love the unlovable. in an

If the company plans to replace machine when it wears out : vandalay industries is considering the purchase of a new machine for the production of latex. machine a costs 1980000

The difference between total actual overhead cost incurred : question 1 the difference between the total actual overhead cost incurred during a period and budgeted total factory

Find the npv if pretax cost savings are 195600 per year at : your firm is contemplating the purchase of a new 573500 computer-based order entry system. the system will be

Summer tyme inc is considering the new 3-year expansion : summer tyme inc. is considering a new 3-year expansion project that requires an initial fixed asset investment of 5.8

Consider the given income statement sales 839408 determine : consider the following income statementsalesnbspnbspnbspnbspnbspnbspnbspnbspnbspnbspnbspnbsp

Determine which one of following is difference between : question 1 a standard cost is a predetermined amount e.g. cost thata should be incurred under relatively efficient

The main purpose of this assignment is to broaden your : the purpose of this assignment is to broaden your understanding of how visuals and graphics can enhance textual

User Account

All Pages