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Your firm is contemplating the purchase of a new $720,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $75,000 at the end of that time. You will save $260,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $110,000 (this is a one-time reduction). If the tax rate is 35 percent, the IRR for this project is %. Please show exactly how to do his problem.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9975822

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