Working capital will revert back to normal at end of project

Assignment Help Financial Management

Reference no: EM131880179

Your firm is contemplating the purchase of a new $480,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $145,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $35,000 at the beginning of the project. Working capital will revert back to normal at the end of the project.

Required:

If the tax rate is 35 percent, what is the IRR for this project? (Do not round intermediate calculations. Input your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

IRR %

Reference no: EM131880179

Questions Cloud

Project evaluation and capital investment : Project Evaluation & Capital Investment. Project Discount Rate (Hurdle Rate a Use WACC at estimated capital structure)

What are some primary functions in terms of support offered : What are some primary functions of a PMO (Project Management Office) in terms of support offered to Project Managers?

Considering new three-year expansion project : Sextet Corporation is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million.

Considering new three-year expansion project : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1,860,000.

Working capital will revert back to normal at end of project : Your firm is contemplating the purchase of new $480,000 computer-based order entry system. Working capital will revert back to normal at the end of the project.

How long does sam have before he will retire : Sam refuses to retire until his retirement account has a balance of at least $ 314,744. How long does Sam have before he will retire?

What is the annual return on this investment : The Milken Company is offering you an investment that promises you $10,000 at the end of 8 years. What is the annual return on this investment?

Compute the present value of an annuity : Compute the present value of an annuity of $ 712 per year for 19 years, given a discount rate of 7 percent per annum.

Compute the present value of your prize : Compute the present value of your prize assuming a discount rate of 8 percent per annum.

User Account

All Pages