12 ts 03:38:35 eBook Hint Print ferences Your firm is contemplating the purchase of a new $580,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $92,000 at the end of that time. You will be able to reduce working capital by $117,000 (this is a one-time reduction). The tax rate is 24 percent and the required return on the project is 12 percent. If the pretax cost savings are $150,000 per year, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV Will you accept or reject the project? O Reject O Accept If the pretax cost savings are $115,000 per year, what is the NPV of this 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.)
12 ts 03:38:35 eBook Hint Print ferences Your firm is contemplating the purchase of a new $580,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $92,000 at the end of that time. You will be able to reduce working capital by $117,000 (this is a one-time reduction). The tax rate is 24 percent and the required return on the project is 12 percent. If the pretax cost savings are $150,000 per year, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV Will you accept or reject the project? O Reject O Accept If the pretax cost savings are $115,000 per year, what is the NPV of this 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.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:12
nts
3
03:38:35
eBook
Hint
Print
eferences
Your firm is contemplating the purchase of a new $580,000 computer-based order entry
system. The system will be depreciated straight-line to zero over its five-year life. It will
be worth $92,000 at the end of that time. You will be able to reduce working capital by
$117,000 (this is a one-time reduction). The tax rate is 24 percent and the required return
on the project is 12 percent.
If the pretax cost savings are $150,000 per year, what is the NPV of this project? (Do not
round intermediate calculations and round your 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 $115,000 per year, what is the NPV of this 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.)
Transcribed Image Text:12
ints
03:38:24
eBook
Hint
Print
References
If the pretax cost savings are $115,000 per year, what is the NPV of this 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
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? (Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Cost savings
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