Working capital will revert back to normal at end of project

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Reference no: EM131621995

Your firm is contemplating the purchase of a new $480000 computer-based order entry system. The system will be depreciated straight line to zero over its five year life. It will be worth $30000 at the end of that time. You will save $145000 before taxes per year in ordering processing costs, and you will be able to reduce working capital by $35000 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% what is the irr for this project?

Reference no: EM131621995

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