Your firm is contemplating the purchase of a new $575,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $59,000 at the end of that time. You will be able to reduce working capital by $74,000 (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 $211,000 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?

Accept

Reject

If the pretax cost savings are $161,000 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?

Accept

Reject

At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?