Your firm is contemplating the purchase of a new $485,000 computer based order entry system. The system will depreciate straight line to zero over its five year life. It will be worth $35,000 at the end of that time. You will save $140,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $60,000(on time. If the tax rate is 24%, what is the IRR for this project?

14.29%

Explanation:

Calculation of the IRR for this project

First step is to find the depreciation

Each year depreciation will be :

$485,000/5=$97,000

Second step is to calculate for the Operating Cash flow for each year

Using this formula

Each year OCF=(Sales-costs)*(1-Tc)+Depreciation*Tc

=$140,000*76%+$97,000*24%=$129,680

Therefore in n five years, the after-tax salvage will be calculated as:

$35,000-($35,000-0)*Tc=$26,600

Hence in year 5, total cash flow will be:

=$129,680-$60,000+$26,600=$96,280

For the year 0, the total cash flow i will be:

-$485,000+$60,000=-$425,000

Last step is to find the NPV

Let NPV=-$425,000+$129,680/(1+IRR)^¹+ $129,680/(1+IRR)^²+ $129,680/(1+IRR)^3+$129,680/(1+IRR)^⁴+ $96,280/(1+IRR)⁵=0

IRR=14.29%

Therefore the IRR for this project will be 14.29%

the correct answer would be b, when, queen, calder hall and london.

explanation:

we always capitalize words when a paragraph or sentence is starting, when an important name is used, when a place is being written, or simply when a noun is used, etc. so in this sentence, sentence is starting from 'when', so it will be written in capital letters. secondly, queen is considered to be an important person, so it will also be written in capital letter. next, the name of the town is mentioned, i-e calder hall, which will also be written in capital letters. in the last,   city name is being used, 'london', which will also be written in capital letters. so option b is the most appropriate one.