Reject accept at what level of pretax cost savings

Assignment Help Financial Management

Reference no: EM131319370

Your firm is contemplating the purchase of a new $545,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $53,000 at the end of that time. You will be able to reduce working capital by $68,000 (this is a one-time reduction). The tax rate is 34 percent and the required return on the project is 14 percent. If the pretax cost savings are $217,000 per year, what is the NPV of this project? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) NPV $ Will you accept or reject the project? Reject Accept If the pretax cost savings are $157,000 per year, what is the NPV of this project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) NPV $ Will you accept or reject the project? Reject Accept At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?

Reference no: EM131319370

Questions Cloud

Result in additional cash flows : Christopher Electronics bought new machinery for $5,075,000 million. This is expected to result in additional cash flows of $1,220,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years

Compute price of put with same strike and expiration date : Rebecca is interested in purchasing a European call on a hot new? stock, Up, Inc. The call has a strike price of $97.00 and expires in 88 days. The current price of Up stock is $123.87?, and the stock has a standard deviation of 40% per year. The? ri..

Population variance of the number of children : Suppose amongst all the families on a Caribbean Cruise, the population variance of the number of children per family is 4. If we were to take a sample of 10 families, then the probability is .9 that the sample variance is less than ___. (Hint: Use..

Simple linear regression equation of problem : Using the simple linear regression equation of problem 3. Find use this to prepare a 95 % confidence interval for E[. Use the results of the simple regression obtained in problem 3 to compute:

Reject accept at what level of pretax cost savings : Your firm is contemplating the purchase of a new $545,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $53,000 at the end of that time. The tax rate is 34 percent a..

How long are typical email addresses : What is the shortest the address on a typical international letter could be, if it is to get to a unique human recipient? (Assume the permitted characters are [A-Z,0-9].) How long are typical email addresses?

Describe failed enterprise resources planning implementation : Describe both a failed Enterprise Resources Planning implementation and a success story of a firm that has successfully implemented an Enterprise Resources Planning system.

Write your critique in standard essay form : discusses project risks and its implications to failure. Identify how lack of vendor (procurement processes) and quality processes led to increased negative risks that ultimately impacted this project. Explain the negative and positive risk plans.

Show that the code has low-weight codewords : These weights are fixed, independent of N; for example, (j, k) = (3, 6). [Hint: show that the code has low-weight codewords, then use the argument from p.215.]

User Account

All Pages