Your firm is contemplating the purchase of a new $2,090,500 computer-based order entry system. The system...

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Finance

Your firm is contemplating the purchase of a new $2,090,500computer-based order entry system. The system will be depreciatedstraight-line to zero over its 5-year life. It will be worth$203,400 at the end of that time. You will be able to reduceworking capital by $282,500 (this is a one-time reduction). The taxrate is 35 percent and your required return on the project is 21percent and your pretax cost savings are $680,350 per year.

Requirement 1:
What is the NPV of this project?
(Click toselect)  $-139,504.09  $-136,627.71  $-151,009.58  $-148,133.20  $-143,818.65

Requirement 2:
What is the NPV if the pretax cost savings are $944,950 peryear?
(Click toselect)  $348,638.76  $359,421.40  $377,392.47  $370,204.04  $341,450.33

Requirement 3:
At what level of pretax cost savings would you be indifferentbetween accepting the project and not accepting it?
(Click toselect)  $791,862.07  $718,170.37  $755,968.81  $793,767.25  $637,714.73

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Your firm is contemplating the purchase of a new $2,090,500computer-based order entry system. The system will be depreciatedstraight-line to zero over its 5-year life. It will be worth$203,400 at the end of that time. You will be able to reduceworking capital by $282,500 (this is a one-time reduction). The taxrate is 35 percent and your required return on the project is 21percent and your pretax cost savings are $680,350 per year. Requirement 1:What is the NPV of this project?(Click toselect) $-139,504.09 $-136,627.71 $-151,009.58 $-148,133.20 $-143,818.65 Requirement 2:What is the NPV if the pretax cost savings are $944,950 peryear?(Click toselect) $348,638.76 $359,421.40 $377,392.47 $370,204.04 $341,450.33 Requirement 3:At what level of pretax cost savings would you be indifferentbetween accepting the project and not accepting it?(Click toselect) $791,862.07 $718,170.37 $755,968.81 $793,767.25 $637,714.73