Required return on the project and pretax cost savings

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Your firm is contemplating the purchase of a new $536,500 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $52,200 at the end of that time. You will be able to reduce working capital by $72,500 (this is a one-time reduction). The tax rate is 34 percent and your required return on the project is 16 percent and your pretax cost savings are $151,050 per year. Requirement 1: What is the NPV of this project?

Reference no: EM13914599

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