What are the npv and irr of this investment project

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Reference no: EM131856195

Unsaved Your firm is contemplating the purchase of a new $700,000 order entry system. The system has an expected 4-year useful life. It will be worth $40,000 at the end of that time. The machine will be depreciated according to the 3-year Modified Accelerated Cost Recovery System (MACRS). You will save $240,000 before taxes per year in order processing costs and you will be able to reduce working capital by $80,000 (this is a one-time reduction). If the tax rate is 35 percent and cost of capital is 12%, what are the NPV and IRR for this project? What are the NPV and IRR of this investment project? Modified ACRS Depreciation Allowances Year 1 2 3 4 Depreciation Allowance 33% 45% 15% 7%.

Reference no: EM131856195

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