Order processing costs-there is increase in working capital

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Reference no: EM131045191

Your firm is contemplating the purchase of a new $850,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five year life. It will be worth $180,000 at the end of that time. You will save $310,000 before taxes per year in order processing costs and there is an increase in working capital of 25,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. If the tax rate is 35 percent, what is the NPV for this project?

Not IRR, Need NPV

Reference no: EM131045191

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