Alt’s is contemplating the purchase of a new $271,000 comput…
Alt’s is contemplating the purchase of a new $271,000 computer-based order entry system. The system will be depreciated straight-line to zero over the system’s five-year life. The system will be worthless at the end of five years. The company will save $108,400 before taxes per year in order processing costs and will reduce its net working capital by $10,000 immediately. The net working capital will return to its original level when the project ends. The tax rate is 21 percent. What is the internal rate of return for this project?