Your firm is contemplating the purchase of a new $1,831,500 computer-based order entry system. The system...

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Finance

Your firm is contemplating the purchase of a new $1,831,500computer-based order entry system. The system will be depreciatedstraight-line to zero over its 5-year life. It will be worth$178,200 at the end of that time. You will be able to reduceworking capital by $247,500 (this is a one-time reduction). The taxrate is 30 percent and your required return on the project is 19percent and your pretax cost savings are $546,400 per year.

Requirement 1:
What is the NPV of this project?
(Click toselect)  $-126,056.17  $-123,457.07  $-136,452.55  $-133,853.45  $-129,954.81

Requirement 2:
What is the NPV if the pretax cost savings are $758,900 peryear?
(Click toselect)  $315,122.33  $341,111.80  $334,614.43  $308,624.96  $324,868.38

Requirement 3:
At what level of pretax cost savings would you be indifferentbetween accepting the project and not accepting it?

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Your firm is contemplating the purchase of a new $1,831,500computer-based order entry system. The system will be depreciatedstraight-line to zero over its 5-year life. It will be worth$178,200 at the end of that time. You will be able to reduceworking capital by $247,500 (this is a one-time reduction). The taxrate is 30 percent and your required return on the project is 19percent and your pretax cost savings are $546,400 per year. Requirement 1:What is the NPV of this project?(Click toselect) $-126,056.17 $-123,457.07 $-136,452.55 $-133,853.45 $-129,954.81 Requirement 2:What is the NPV if the pretax cost savings are $758,900 peryear?(Click toselect) $315,122.33 $341,111.80 $334,614.43 $308,624.96 $324,868.38 Requirement 3:At what level of pretax cost savings would you be indifferentbetween accepting the project and not accepting it?