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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 $40,000 at the end of that time. You will save $160,000 before taxes per year in order processing costs, and 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. If the tax rate is 35%, what is the IRR for this project?

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Category:- Basic Finance
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