Your firm is contemplating the purchase of a new 545000


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?

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Financial Management: Your firm is contemplating the purchase of a new 545000
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