Irr for project


Your firm is contemplating the purchase of a new $720000 computer based order entry system. The system will be depreciated straight line to zero over its five year life. It will be worth 75000 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 what is the IRR for this project?

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Finance Basics: Irr for project
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