The system will be depreciated straight-line to zero

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Your firm is contemplating the purchase of a new $850,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5 year life. It will be worth $75,000 at the end of that time. You will save $320,000 before taxes per year in order processing costs and you will be able to reduce working capital by $105,000 (this is a one-time reduction). If the tax rate is 35%, what is the IRR (internal rate of return) for this project (hint…you need to first acquire OCF…operating cash flow)

Reference no: EM131185259

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