Indifferent between accepting the project and not accepting

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Reference no: EM131442525

Your firm is contemplating the purchase of a new $592,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $57,600 at the end of that time. You will be able to reduce working capital by $80,000 (this is a one-time reduction). The tax rate is 32 percent and your required return on the project is 19 percent and your pretax cost savings are $178,900 per year.

What is the NPV of this project?

What is the NPV if the pretax cost savings are $248,450 per year?

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

Reference no: EM131442525

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Indifferent between accepting the project and not accepting : Your firm is contemplating the purchase of a new $592,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $57,600 at the end of that time. At what level of pretax cost sa..

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