13. Project Evaluation [LO1]Your firm is contemplating the purchase of a new R925,000 computer-based order...
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13. Project Evaluation [LO1]Your firm is contemplating the purchase of a new R925,000 computer-based order entry system. The system will be depreciated using the 20 per cent reducing-balance method over its five-year life. It will be worth R90,000 at the end of that time. You will save R360,000 before taxes per year in order-processing costs, and you will be able to reduce working capital by R125,000 (this is a onetime reduction). If the tax rate is 28 per cent, what is the IRR for this project? Show how IRR is calculated in Excel.
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