Use the following information to answer the following 3 questions.

Your company is facing earnings pressure and is considering acquiring a new computer system that will initially cost $1 million and will save $300,000 per year in inventory and receivables management costs.  The system is will last for five years.

The system is expected to have a salvage value of $100,000 at the end of year 5 and will be depreciated to zero using three year MARCS (rates are: Year 1: .3333, Year 2: .4445, Year 3: .1481, Year 4: .0741). 

The marginal tax rate is 40%.  Assume a required rate of return of 11%.

• Cash Flow From Assets in Year 5 is:
  • $180,000
  • $280,000
  • $240,000
  • $300,000
• Net Present Value is:
  • $28,123.68
  • $28,744.07
  • $32,465.21
  • $27,682.15
• Internal Rate of Return is:
  • 10.0%
  • 12.2%
  • 9.7%
  • 14.6%