Your firm is contemplating the purchase of a new $495,000 computer-based order entry system the system will be depreciated straight line to 0/6 year life it will be worth 66,000 at the end of that time you will save $173,000 before taxes per year in order processing cost and you will be able to reduce working capital by $47,000 at the beginning of the project working capital will revert back to normal at the end of the project the tax rate is 22% what is the after tax salvage value of the equipment what is the annual operating cash flow what is the IRR for this project

Your firm is contemplating the purchase of a new $495,000 computer-based order entry system the system will be depreciated straight line to 0/6 year life it will be worth 66,000 at the end of that time you will save $173,000 before taxes per year in order processing cost and you will be able to reduce working capital by $47,000 at the beginning of the project working capital will revert back to normal at the end of the project the tax rate is 22% what is the after tax salvage value of the equipment what is the annual operating cash flow what is the IRR for this project

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 4CE: Manzer Enterprises is considering two independent investments: A new automated materials handling...

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