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Your firm is contemplating the purchase of a new $540,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $540,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $68,000 at the end of that time. You will be able to reduce working capital by $93,000 (this is a one-time reduction). The tax rate is 21 percent and the required return on the project is 9 percent. If the pretax cost savings are $150,000 per year, what is the...
Your firm is contemplating the purchase of a new $515,000 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 $78,000 (this is a one-time reduction). The tax rate is 21 percent and the required return on the project is 9 percent. If the pretax cost savings are $150,000 per year, what is the...
Your firm is contemplating the purchase of a new $490,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $38,000 at the end of that time. You will be able to reduce working capital by $63,000 (this is a one-time reduction). The tax rate is 21 percent and the required return on the project is 9 percent. If the pretax cost savings are $150,000 per year, what is the...
Your firm is contemplating the purchase of a new $520,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $56,000 at the end of that time. You will be able to reduce working capital by $81,000 (this is a one-time reduction). The tax rate is 22 percent and the required return on the project is 10 percent. A.If the pretax cost savings are $150,000 per year, what is the...
Your firm is contemplating the purchase of a new $495,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $41,000 at the end of that time. You will be able to reduce working capital by $66,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. The tax rate is 22 percent and the required return on the project is...
Your firm is contemplating the purchase of a new $495,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $41,000 at the end of that time. You will be able to reduce working capital by $66,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. The tax rate is 22 percent and the required return on the project is...
Your firm is contemplating the purchase of a new $535,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $65,000 at the end of that time. You will be able to reduce working capital by $90,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. The tax rate is 25 percent and the required return on the project is...
Problem 10-17 Project Evaluation [LO2] Your firm is contemplating the purchase of a new $570,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $86,000 at the end of that time. You will be able to reduce working capital by $111,000 (this is a one-time reduction). The tax rate is 22 percent and the required return on the project is 10 percent. If the pretax cost savings are $150,000...
Your firm is contemplating the purchase of a new $480,000 computer-based order entry system. The to zero the end of that time. You will be able to reduce working capital by $35,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. Assume the tax rate is 35 percent. Suppose your required return on the project is 10 percent and your pretax cost savings are $155,000 per year. What is the...
Your firm is contemplating the purchase of a new $430,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $37,000 at the end of that time. You will be able to reduce working capital by $42,000 at the beginning of the project. Working capital will revert back to normal at the end of the project. Assume the tax rate is 22 percent. а. What is the aftertax salvage value...