contemplating the purchase

demonstrate the essence of the cost of debt and equity
November 7, 2019
Decision Statement
November 7, 2019

contemplating the purchase

Your firm is contemplating the purchase of a new $600,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $64,000 at the end of that time. You will save $230,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $79,000 (this is a one-time reduction). If the tax rate is 30 percent, what is the IRR for this project

Your firm is contemplating the purchase of a new $600,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $64,000 at the end of that time. You will save $230,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $79,000 (this is a one-time reduction). If the tax rate is 30 percent, what is the IRR for this project

Your firm is contemplating the purchase of a new $600,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $64,000 at the end of that time. You will save $230,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $79,000 (this is a one-time reduction). If the tax rate is 30 percent, what is the IRR for this projec

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