Firm is contemplating-order processing costs

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Your firm is contemplating the purchase of a new $625,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $69,000 at the end of that time. You will save $255,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $84,000 (this is a one-time reduction).

If the tax rate is 35 percent, what is the IRR for this project?

Reference no: EM13917824

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