a224556dc5dcb81837ba424407071a0d_e552b7f9297ec00e938dcb847ea4419a

A224556dc5dcb81837ba424407071a0d_e552b7f9297ec00e938dcb847ea4419a

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1. Your firm is contemplating the purchase of a new $636,000 computer- based order entry system. The system will be depreciated straight- line to zero over its six-year life. It will be worth $44,000 at the end of that time. You will be able to reduce working capital by $39,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. Assume the tax rate is 30 percent. Suppose your required return on the project is 10 percent and your pretax cost savings are $194,000 per year. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ Suppose your required return on the project is 10 percent and your pretax cost savings are $134,000 per year. What is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ 2. We are evaluating a project that costs $1,398,000, has a six-year life, and has no salvage value. Assume that depreciation is straight-line to
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Christopher Reinemann
"Before using Course Hero my grade was at 78%. By the end of the semester my grade was at 90%. I could not have done it without all the class material I found."
— Christopher R., University of Rhode Island '15, Course Hero Intern

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